My client is 42 and runs a consultancy in the oil industry. As a result he has to travel extensively, including contracts in dangerous and high disease risk countries such as Algeria, Sudan and Nigeria. He has already arranged international private medical insurance but is very concerned about protection cover, especially for his income. Budget is not a factor. What are his options?
Paul Edwards, Roxburgh Financial Management
There are a small number of providers who do not rate or exclude Income Protection based on a client's occupation. However, while budget is not an issue in this scenario, the majority of providers will probably simply decline cover rather than rate.
We would generally therefore look to place this client's protection with a provider we know has provided cover for clients of ours working in similar countries who will not worry about where in the world they are working and what they are doing there. We do not then have to worry about either ratings based on occupation which may slow down the cover being put on risk or more importantly not paying out in the event of a claim where the accident occurs in a foreign country as mentioned.
The one thing we would stress to the client however, is that the claim has to be made by the policyholder while in the UK. That means that if injury occurred while abroad there would have to be separate cover in place to ensure the client was able to be transported back to the UK.
This is normally an area that travel insurance would cover and would dovetail with the international PMI to ensure that both immediate treatments would be available along with repatriation to the UK and then the on-going income protection. The normal conversations surrounding level and type of cover and deferment periods surrounding the income protection need would then be able to be had.
Matt Rann, Aegon
The client is clearly worried about his protection cover given his overseas travel in relation to his job in the oil industry. It is unclear how long he spends in these high risk countries and to which areas within that country are visited.
However, depending on these answers, life cover can potentially be offered with a cash extra loading or potentially an exclusion of the visited countries which are deemed to be high risk or a straight decline.
Critical illness again can be offered dependent on answers to length and frequency of travel and areas visited. Cover can be arranged using appropriate exclusion wordings. Generally income protection is not available in the circumstances outlined by the client.
If travel is by non scheduled airlines or by helicopter this will also attract the attention of the underwriters. Additional cash extras or loadings may apply.
It is highly advisable that the intermediary shops around. Many insurers place these challenges on the ‘too difficult' pile due to the work that is involved in creating the appropriate exclusions and the manual wrap arounds required. Solutions are available but may be difficult to find….
In addition, the majority of insurers use reassurer guidelines. Reassurers differ in their approach to travel risks so this is another good reason to shop around. Also expect some loadings to change virtually overnight as violent situations occur throughout the world. Advisers may want to visit the Foreign Office website www.fco.gov.uk for an up-to-date position. But be wary this is only a general guide.
Phil Brown, Zurich UK Life
Basic premium rates assume the mortality or morbidity experience of the country in which the policy is issued. In today's global society the issue of foreign travel is a frequent underwriting concern.
Protection applications can be considered for applicants who go on short-term business trips to certain countries. Underwriters will look at the frequency and duration of the travel and the regions and locations travelled to within a country.
Short-term business travel to major cities using conventional means of transport can often be accepted at ordinary rates. However, more frequent travel or travel to areas involving additional risk factors such as political instability, increasing acts of terrorism, widespread disease or lack of proper medical facilities will need a loading or exclusion, or in some cases, may be declined.
Any application with short-term business travel will be looked at on an individual basis as circumstances can change almost daily due to travel alerts issued by various government departments and embassies. At the time of writing, the Foreign and Commonwealth Office currently have travel warnings for Algeria, Sudan and Nigeria.
These include a high threat from terrorism with western business interests and foreign workers as targets. In addition, they highlight a high risk of kidnappings of those working for western businesses including oil workers. At this moment in time, we would in most cases decline an application for Income Protection or Critical Illness Cover for someone travelling to these areas of the world. Terms may be available for Life cover for short trips to major cities but a loading may be applied.
