I do few PMI sales and want to cover my back with a business client. They are a wealthy couple in their 50s and both have had heart attacks. Obviously their PMI cost is high but they are looking at moratorium underwriting to alleviate this. Am I right to be concerned, even though I've explained it to them?
However, it excludes all conditions that they were aware of during the five years before their cover began, even if they have not needed to see a doctor about them or taken prescribed medicine. The condition may become eligible for cover if they have not received any medical advice, treatment or medication for that condition, or any related condition, for a continuous period of two years after their cover starts.
In this instance, it is important that your clients understand that they may not be covered for subsequent treatment relating to their pre-existing heart conditions.
So it may make more sense for them to join on a FMU basis which would allow our medical underwriters to assess their individual circumstances at the point of joining.
Andy Couchman,Bank House Communications
Moratorium underwriting can be very effective but it is essential that clients fully understand and accept how it works and how it will affect them, given their medical history.
Typically, insurers look back five years, then exclude all pre-existing conditions for two years, and until free of any treatment or symptoms (including check-ups and preventative medication, both are likely to apply to them) for two years (a so-called 5/2/2 moratorium).
In their case, they may never be without treatment for two years. A few policies have a fixed rather than rolling moratorium period and such policies may be ideal here.
Even so, heart and circulatory conditions will be excluded, usually for a fixed two years. If either client has such a condition within the first two years they would have to rely on the NHS or pay for any treatment themselves.
Another option may be if the couple could be included under their employer’s group scheme, as larger schemes may accept members regardless of their medical history. However, that usually only applies where a scheme is being set up or when someone first joins a company.
PMI may still cover your clients for other health conditions but do be aware that many conditions are inter-related. Overall, this is a tricky situation, not only ensuring your clients understand the situation, but that you have clear evidence that they both understand and accept the limitations of what they are buying.
