I have a client looking to buy life and income protection (IP) cover. My problem is that, although he has indefinite leave to remain in the UK, he is a refugee and has no long-term medical or financial history. What problems are we likely to encounter?
Ian Smart, Bright Grey & Scottish Provident
As the client has been granted indefinite leave to remain in the UK, it is likely that he has already been here for some time, typically five years or more. Any recent medical history should therefore be easy to verify.
His lack of long-term medical history will be an issue only if there are disclosures that would necessitate medical evidence.
We are usually able to fulfil routine requirements and establish any problems by requesting a full medical, a full blood test and urinalysis. If he has had any history of medical conditions that need more detailed evidence, this can sometimes be a problem and we may have to decline the application if we cannot get sufficient evidence.
His country of origin and previous residence might trigger additional requirements, such as an HIV test if there is a risk from his previous place of residence. However, if he has not been there for more than five years, it may not be required. Assuming he is working and has a permanent contract, evidence of earnings should not really be a problem and should be easy to substantiate for the purposes of an application for IP.
The client should, however, be made aware that depending on the provider chosen, there may be restrictions placed on the payment of benefits should he decide in the future to leave the UK either temporarily or permanently.
Peter Chadborn, Plan Money
It would be unwise for any adviser to tackle a case such as this without first seeking guidance from a life office in order to manage their client's expectations and to ensure that indications of possible outcomes are realistic.
Guidance I have sought from PruProtect has concluded that there are two separate considerations: risk and contract.
In terms of risk, they would need to know which country the client has come from and what, if any, are his future travel intentions. They would also need to know, particularly for IP, if they would be able to obtain medical evidence in the case of material disclosures.
Furthermore, in the event of a claim, would they be able to perform the usual investigations? In terms of contract, we would need to ensure that the client was able to engage in a legally binding contract, whether there were any language issues and ultimately whether they understand the terms and conditions of the contract and their responsibility for disclosure.
If the above risk and contract stipulations have been satisfactorily met, then PruProtect would offer life and IP cover subject to the usual underwriting processes. Assuming the financials are OK and occupation does not carry any undue risk, I would want to strive for the best terms possible.
This would mean own occupation definition for IP. Even if this comes at a cost, it is generally worthwhile as opposed to the significantly inferior occupation definitions.
