Hi everyone, this week I am speaking with Alan Knowles, husband, co director of Cura Financial Services, Chair of the PDG and the 2020 winner of the Protection Review’s Protection Adviser of the Year.
Alan is doing an income protection masterclass, talking about how versatile these policies are and how they can sometimes have a bad rep, for not being particularly accessible. But, Alan goes through 4 case studies that show how speaking with an adviser, can truly help people with higher risks to get income protection.
The key takeaways:
- A case study of income protection for someone with Wolff-Parkinson-White syndrome and type 1 diabetes.
- A case study of income protection for a person living with bipolar disorder.
- A case study of income protection for a rock climber.
- A case study of income protection for someone living with Antiphospholipid Syndrome.
Next week, will be the last episode of series 2 and we have some exciting changes coming up for season 3 in 2021. I’m going to be chatting with Matt Rann about his career in underwriting, discussing how underwriting has changed over the last 40 years.
Remember, if you are listening to this as part of your work, you can claim a CPD certificate here on the website.
Kathryn: Hi everyone, today I have Alan Knowles with me who is my husband. He’s the co-MD of Cura and he is the chair of the Protection Distributors Group. He is also the father to three children and the list is pretty much endless. Hi Alan!
Alan: Hi Kathryn, how are you?
Kathryn: I’m good thank you, how are you?
Alan: I am very good thank you, very good.
Kathryn: So Alan is joining me today to go through a bit of an income protection masterclass. This is the Practical Protection Podcast. So Alan, we’ve already done a little bit of pleasantries there, saying how are you, how are you to each other but how has it been for you? I know we’ve just had a week’s annual leave but do you want to let our listeners know what it’s been like trying to – trying to have a week off?
Alan: Yeah, it’s been – do you know what, actually I’d say it’s been interesting but it’s been nice. It’s been nice just to switch off for a week and just not do much and we kind of hit this week where at the very start of it – obviously with both Kathryn and I being off at the same time, we said to everyone in the office, “Don’t worry ‘cos things it’s, you know, it’s December, it’s the start of December, things will start to quieten off a little bit now.” And then Monday hit and, you know, we realised that actually there’d been an incredible number of enquiries over the weekend. It was incredibly busy and it was almost like, you know, one of our sort of peak days for the year. So just as we’re taking time off, but do you know what, we just said, “We’re still having a week off. We need to just have a break. We need to have just a week where we don’t do anything.” So the team were brilliant. They all, you know, looked after everything and kept everything up to date and did a cracking job for us and, you know, yes we had to log on and do the odd thing here and there but we sat down, we watched a couple of films. I can’t remember what films now but we did watch a couple.
Kathryn: We watched – I’ll butt in there and just help, so we watched Motherless Brooklyn which was really good, main character was Edward Norton on that. It was just like an old kind of film noir-style film which was enjoyable and then a film that I thought I’d enjoy and I think you enjoyed quite a bit more than me but I was kind of disappointed by it. It was Bill & Ted 3. It wasn’t as good it promised.
Alan: Yeah, but I didn’t set my hopes very high –
Kathryn: I did.
Alan: ‘Cos whenever you make a film 20 years after the original then it’s never going to be really anywhere near as good but the Motherless Brooklyn was good and I enjoyed the beginning and the end. I slept through the middle and managed to still follow it so – but it was good. We both enjoyed that and we did a jigsaw, a Pokemon jigsaw that our son sort of half –
Kathryn: Started and then –
Alan: And we decided to finish it and I can’t believe I’ll admit this on air but I painted some little fantasy miniatures as well which has been my new lockdown hobby, doing a little bit of painting and trying to get some time away from gadgets and electronics and then obviously on Friday we had our quiz night. Well, I say our quiz night, Kathryn organised all of this and, you know, I hosted a round, Roger and Kevin both hosted a round and – but obviously it was largely, you know, Kathryn and Lindsay who organised this and raised an incredible amount of money for Parkinson’s. So it was just, you know, great and it was a really nice way to end the week as well.
Kathryn: Yeah, it was lovely. I think, at the moment we’re just getting sort of like final numbers in and I think we’re close to about £3,500 pounds raised for Parkinson’s UK and obviously incredibly thankful to everybody who donated, for the people who were able to turn up and get involved. I think we all had a really, really good giggle and it was just nice to do something like that and I think it was – it was for a serious cause but it was done in such a – I think a light-hearted way that I think, you know, we had some people there from the Parkinson’s UK and from local Parkinson’s groups as well and everyone just sort of – the feedback’s been lovely and people just saying that it was just fun, you know, and it was just a nice break from everything that’s going on this year, it’s just a nice break.
Well as you know Alan, as the listeners know, we do usually have a truth or lie feature on the podcast but I’m going to skip it this week because the one that I did last week with Paul and Di from Winston’s Wish was just a bit too easy for you to be able to guess if I was being truthful or lying in it. So that is going to be up to my next – to my guest next week for – and which will actually be the final truth or lie that we’re ever going to do.
Kathryn: It’s quite sad but obviously all good things must come to an end at times. But let’s get focused on the main things here. So I think a good place to start is that, you know, we have a lot of people who are listening who are protection advisers or who work in the protection insurance side of things but there are other people as well who are listening from lots of different areas. But can you just give quite a broad background to start off with about income protection and then we’re going to just jump straight into some case studies?
Alan: Yeah, no absolutely. So I mean, I think as you said, a lot of people obviously listening to this will already know what income protection is but basically income protection is an insurance policy which protects your income or replaces a proportion of your income if you are too ill to do your job, if you are too ill to work and, you know, the perfect analogy which I’ve heard quite a lot of advisers use in the past is that if you had a machine that printed, you know, £1,000 a month or £2,000 a month sat in the corner of your house, would you insure it? Would you insure it in case it broke down? I think the answer is yeah, probably almost everybody would do and this is the same principle. The difference is, is that you’re the machine and if you can’t work because you’re too ill, you know, you ensure that you have that monthly income coming in until you return to work, until you’re well enough or until you retire if you can never return to work.
It probably for me is the one main and major protection policy that everybody who is working should really have, you know, unless they’ve got it provided through their work or, you know, incredibly generous employers who give, you know, full sick pay etcetera, then everybody should really have this policy and I think, you know, if this year has really shown us anything, it’s just how dependent upon our incomes we all really are. You know, we – this year – I mean we’ve seen millions of people furloughed – a word that, you know, pre-2020 most people had never even heard of and now every person in the country knows what furlough means but the Government basically offered their own income protection scheme, you know, to help all these millions of people who couldn’t work because of the Government lockdown and that was their own version of an income protection policy. The difference is, is with our income protection – with these policies, is they cover you if you are too ill to work. So if you have a disability or an illness and these things could strike at any time and this year has just shown how much of an impact that can really have to any of us.
Kathryn: Absolutely and I do think that sort of analogy that you used there about the machine, I was speaking with Tina Weeks recently and she sort of said that same analogy to me and it is just kind of the perfect one. Obviously, we never want to kind of like go into sort of like scaremongering people at all but, you know, I think, you know, everything that’s gone on this year has probably really brought the need for income protection to light for a lot of people and, you know, that analogy to say – sort of like, if you had a machine that was giving you, you know, sort of – it’s kind of like as well, I was given an analogy when I was younger, when I was at school once and they said, “Right –” The teacher said, “Right, I’ve got a million – I’ve got a vase in my hand that’s £1 million – it’s worth £1 million. Right, I want you to pass it all along you,” and all of us, you know, we were imagining it obviously, it wasn’t worth £1 million, you know, we were handling it with such care, you know, and such, such care and he’d sort of like said at the time – it was like – afterwards he was just like – he goes, “You’re all worth fare more than £1 million and look how careful you’ve been with this and yet, you know, when we’re actually just being ourselves, we just take everything for granted so much that we don’t necessarily think of ourselves obviously in monetary terms.”
I don’t think I ever do think of myself in monetary terms but that is the way of life. But, you know, I just – I think that those analogies sometimes can really sort of like hit home to people like, “Oh actually, that’s really true.” It comes down again I think probably to that whole thing of – isn’t it as well – people insure their pets far more than they insure themselves for like things like private medical insurance and things like that and it’s strange how we do that. We put so much more worth upon other things than ourselves but let’s go straight into the case studies then ‘cos I think that’s what a lot of people will be here to listen to. So I know – I believe you’ve got four case studies for us this time and yeah, if you want to just start going through them and explain the sort of like what the – obviously we’re known for talking about risks and different things like that so if you can explain the risks and tell us about what the – how you went about getting the income protection for these people.
Alan: Okay, yeah, absolutely. So the first client that I’ll start with then, male client and now he is – or he was when we did the policy – he was 40 years old and he was a non-smoker. Now he had two different conditions. So the first one is a condition called Wolff-Parkinson-White syndrome. Now it’s actually a fairly common condition but, you know, how many people have heard of it? I’m not too sure but basically the condition affects the electrical system around the heart and it can cause abnormal heart rhythms basically, SVTs or super-ventricular tachycardias and this client basically had a procedure that was known as an ablation to correct his heart rhythm ‘cos his heart rhythm was slightly off. After having this ablation, he’d been absolutely fine, his heart rhythm had remained stable for a number of years. He’d still have the condition but ultimately it was causing absolutely no problems or concerns.
Now in isolation this usually isn’t a major concern for insurance companies as long as there’s no outstanding treatments and, you know, it’s like this gentleman’s where it’s pretty well-controlled at the moment but the client also had type one diabetes. Now this is a much bigger problem for – especially for income protection and the sickness-related policies because obviously diabetes can lead to lots of different conditions and lots of different – I guess, problems in a sense if the control goes or, you know, if they do start to have some complications. Now with this client, he’d actually been diagnosed with type one diabetes for 30 years. He had good readings, it was all very well under control and the only complication he’d had was something called background retinopathy. So what happens sometimes with diabetes is the eyes can change and you can have sort of effects to the retina on the eyes, without getting too complicated on it and background retinopathy is the earliest of those. It’s almost the mild – the mildest of those changes and to be honest, that’s not bad going for having had that condition for, you know, 30 years. I thought, you know, thta was doing really good – and actually, you know, this client was fit, he was healthy, he runs, he does triathlons so as you can imagine Kay, we obviously had a good, quite geeky chat about triathlons and the like and –
Kathryn: Right type of shoes I imagine and things like that?
Alan: Absolutely, absolutely. Transitions and all these sorts of fun things. So, you know, it was a good call. We probably spent as much talking about that as we did about insurance but, you know, income protection is – it’s got a – I guess you could say – well a lot of people do think it is harder to get for people who have diabetes. But actually there are quite a few providers who can consider cover in some way or form. Yes, it is harder for type one and actually, you know, the range of insurers does drop down quite a lot but there are still options, you know, there are still people that we can discuss these policies with and I’m pleased to say that actually with this client I was able to present him with a couple of options and this was almost like the ideal solution for me because I was able to offer him cover with an exclusion and without an exclusion so I could say, “Look, we can do this for a cheaper premium but you will not be able to claim for anything relating to your diabetes. So if your, you know, your retinopathy got worse and you couldn’t see the screen at work for example, or you had a problem with your kidneys in the future or even if you ended up having, you know, your blood sugars went really high and it led to a heart attack or something else, you wouldn’t be able to claim for it.”
But then I was also able to say, “However, we can also offer you a policy for a higher premium where you will be covered for anything that stops you working regardless if it’s related to your diabetes.” And I presented both and I’m pleased to say that actually he did take the cover which – the protection – income protection that covered him for everything. He paid what was called the loading so where the price went up a little bit. Now to offset that cost a little bit, what we did is we introduced a two-year claim capping to it. So we sort of decided between us, we wanted to keep this into a budget for him but he really, really wanted to still have that full cover. His wife had a decent job as well so we agreed that we could work on this with a two-year claim and it might be something that we would review in the future to try and get him on to a full-term claim.
The policy that we ended up providing and offering paid him – this would basically pay him £3,000 a month if he couldn’t do his occupation for more than three months and this would pay him for two years if he couldn’t work and for me, you know, I just thought that was an absolutely brilliant outcome for that client and he got cover for the diabetes which he wanted as well as anything else that would have stopped him from working.
Kathryn: I have to say, that’s brilliant. I think as well if I remember rightly for this person that there wasn’t an exclusion for the Wolff-Parkinson-White was there? It was all – it literally covered him for anything. There was no exclusions in regards to the pre-existing health?
Alan: Absolutely right, absolutely. So it was guaranteed premiums, fixed premiums and there was no exclusions for either condition on the policy and this was all helped by the fact that, you know, he was fit, he was healthy, he was running, he was leading an active lifestyle and we were able to use all this when we spoke to the insurance company as well.
Kathryn: Yeah. I think what really stands out about that one as well for me like when we were talking about it is the fact of how much you can adapt the policy to suit that person. So obviously, you know, you have the option, you know, there was two options there you could present to the client; an exclusion or not an exclusion, you know, you were able then to say, “Right, okay, you really want it, you know, to be able to cover everything. Well, let’s also – we need to make sure it’s still affordable and affordable for the long term for you.” So it was a case of, “Okay then, so let’s do it for a two-year claim period.” I think, you know, everybody who is listening, you know, as you were as well, and as a client, ideally you have the claim period running up until retirement but, you know, it becomes sometimes that kind of offset of, “Well do we have something that’s affordable that’s going to exclude anything at all to do with the pre-existing health?” which is pretty much – especially in this situation, a very, very hefty set of exclusions or, “Do we adapt it slightly to go, ‘Well actually, maybe the full term, you know, full cover to retirement isn’t available right now but we’ve got two years per successful, claimable event, which as I say covers the situations which are, you know, potentially going to – there’s quite a few situations there that could potentially lead to a claim at some point.”
Alan: Absolutely and do you know, what other policy can you not only change the benefit, you can change the term, you can change the claim period, you can change the deferment period, you can look at exclusions or loadings? You know, you don’t have that flexibility with any other type of protection insurance like life insurance or critical illness so it really does allow you just to tailor this to a budget and to make the policy suitable as you can to everyone that you speak to.
Kathryn: Yeah, absolutely. That’s a really, really good one. So I think you’ve got another health condition – another client with a health condition that you were going to chat through.
Alan: I absolutely do. So the –
Kathryn: You sounded very eager then, “I absolutely do!”
Alan: Absolutely do, I absolutely do. So yeah, the second client – so do you know what, this is just for me a really, really interesting case for more than one reason which probably everyone else listening to it is going to think it’s really boring actually and not interesting and all think I’m really sad for saying this is interesting but this is insurance.
Kathryn: Alan, you’ve just admitted to painting miniatures so I think everybody pretty much is wondering how exciting this is going to be.
Alan: Surely everything I say from now should be interesting in comparison? So this was a – this was a lady who was 57. She was a non-smoker and she had a condition called Hughes Syndrome. Now this is more commonly now known as Antiphospholipid Syndrome or APS and it’s basically – it’s an immune system disorder which can increase the risk of blood clots and DVTs so blood clots occur within the blood leading to DVTs or deep vein thrombosis. Now it’s sometimes – it’s been referred to as sticky blood syndrome because basically the blood is thicker and becomes sticky where really, you know, your blood should be at an ideal sort of level between thick and thin and obviously with this it goes too much to one way. Client takes a blood-thinning medication called Warfarin which in itself – Warfarin isn’t something that insurers particularly like, you know, I can’t say I’m an expert on this but my understanding is there are probably side effects for taking this long-term that ultimately, you know, for her she’s got to take it because of why – she has a risk of blood clots and strokes and DVTs etcetera.
Now where this one got interesting for me is – and I’d never seen this before but she had – she also had a condition called lupus which I have seen before by the way but lupus is an autoimmune condition which usually makes people uninsurable for income protection but what was new for me for this one is that her GP actually believes that this condition burned itself out about 20 to 30 years ago because she’d never had any symptoms in all that time and she takes no medication for it whatsoever. Basically, while they had originally diagnosed her with lupus, they said they believed almost her liver had just basically recovered and completely burned the condition out and essentially, very rare, but she had recovered from what was believed to be a chronic condition. Now, this was supported by the fact that actually if she had had lupus, we would not have got her an income protection policy because that is a declinable condition for income protection pretty much across the board but we were able to actually finally offer her something.
Now, so I guess with this lady we had two challenges here; the first challenge was getting cover with these conditions which we were able to actually find and we were able to source somebody who was happy to take this on albeit we were looking at an exclusion around the, you know, the Antiphospholipid syndrome. Now, what ended up happening is we submitted the application but after a couple of months of underwriting which is where we, you know, insurance companies go backwards and forwards with the doctors getting all the information back – the insurance company actually turned the application down so they declined her and said, “I’m sorry but even, you know, all this taken into account, we can’t offer you the cover.” Now obviously we were a bit baffled by this. We didn’t quite understand it but we thought, “There must be more to this. There must be something we weren’t aware of.” You know, sometimes can be the cases when you see doctors’ reports.
So the client signed us consent to be able to have a conversation with the insurance company and we spoke to the insurers about this. What it actually turned out – and this was our second challenge with this one – is that the medical reports for this lady stated that she also took medication for epilepsy and that she also took statins which is a medication for high cholesterol. Neither of these were correct, you know, she said, “I’ve never had epilepsy, never had it in my life. I don’t take medication for it and I’ve never had high cholesterol and I don’t take medication for it.” And what it basically transpired is that 20 years ago, a doctor added these onto her notes – for whatever reason we’re not sure, obviously that was 20 years ago and they were never removed. But, you know, she went back to her doctors, we challenged this, we got this corrected ‘cos obviously the nurses and doctors all knew she didn’t take these medications or have these, got the records corrected, got this back to the insurance company and then they revoked the decision and they offered the cover for her which was just, you know, an incredible turn-out, you know, of events for me and it just really showed to me the value and how important it is to discuss a decision like that with the insurance company because we could have just left that and said, “I’m really sorry but actually do you know what, they declined the policy, it was too much on there and we can’t do this.” But we took it that step further and we said, “We want to know what that reason is,” and we spoke to the insurers and we figured it out and we actually figured out that there was something wrong and with the client’s help got it corrected and got that client cover and that’s not an isolated incident. And yes it’s concerning that doctors and reports can have incorrect information on but it does happen.
Kathryn: I was going to say, I mean that’s something that we’ve, you know, we experience quite regularly actually which is I think surprising. What I think is quite surprising is that obviously as ourselves as we are specialist advisers and we understand quite, you know, quite clearly a lot of the time what certain medical conditions or severity of medical conditions will lead to certain terms, so when something comes back and it’s maybe terms that we’re not expecting or there’s maybe decline and, you know, for us it’s not easy but, you know, it’s quite clear very early on for us that something isn’t adding up. Now whether or not that’s the client’s misunderstood something or whether or not there’s something been incorrectly recorded on the GP report, you know, it’s kind of a mix as to whether or not which of those things are the case.
But we’ve obviously – I mean, we’ve spoken before, we’ve seen it where GP reports have said that somebody’s diabetic and they’re not diabetic or the GP report actually says that someone’s cancer has a higher staging and grading than what it actually was and that’s been the reason that someone’s been declined by so many insurers before they come and speak to us and I think your message there is really important to say sort of like as an adviser, it’s really important to be able to identify when things have gone wrong and if you don’t have time to obviously go through those terms and to sort of like figure out why things have suddenly changed so much or why there’s a decline then obviously there’s maybe a duty then to speak to more of a specialist adviser who can step in and try and figure these things out.
But possibly as well for people, you know, if you do have the time and the resources, to maybe say, “Well actually, let’s try and see this report, you know, let’s see what’s going on. Let’s make sure that the right information has gone to the insurer because that’s not what we were expecting at all.” And I think, you know, it’s very hard because of data protection. I think we all know that it’s hard because obviously everything goes from the insurer – from the GP to the insurer, it’s like who can have access to that data, well at the moment it’s just purely like the GP and the insurer and trying to make sure that we still – and we maybe sort of like figure out some kind of system between us all that obviously is fully compliant to data protection where, you know, if there is something that’s very, very different to what has been originally stated and, you know, it’s very clear to the – to either the insurer or the adviser that something’s just not adding up in regards to the information the adviser knows or the insurer knows – that we can build something where we can all work together and hopefully chat together a bit more and, I don’t know, maybe that will be something that we can figure out at some point. I’m sure there’s lots of compliance and data protection people listening to this going, “She’s mad. There’s no way that we can do that. There’s absolutely no way.” But, you know –
Alan: It’s not just compliance people thinking that!
Kathryn: No, but there needs to be a way that we can try and sort of like do this because it’s happening more and more and we’re seeing it a lot more with our clients and the thing I think that probably worries me quite a lot is that if we’re seeing it so much with our clients, how much is that happening elsewhere and it’s not being identified and people are either just walking away from getting insurance and actually they could possibly have it but it just so happens that the GP report is wrong?
Alan: Yeah and I think there’s another – a sort of another I guess concern over this as well. I mean it delves a little bit away from income protection and maybe into life insurance but affects both is – what happens if a case goes straight through? So what happens when an insurance company doesn’t write to a doctors – do a doctor, you know, if we accept 70 or 80% of our cases without any medical evidence obviously that’s not Cura’s figures because most of ours gets doctors’ evidence because of the, you know, the nature of the customers that we help but a lot of people do see straight through business. What happens if incorrect information is on those reports and then, you know, an insurance company’s never seen them but then a claim comes in five or 10 years down the line – especially if somebody’s passed away and, you know, how is that then challenged at that point? And it raises a whole question of medical evidence as well. We try and move away from it because it’s hard to get but actually in some ways maybe we should be getting it because it, you know, solidifies, you know, the validity of the information but that’s probably a bigger conversation to save for a different time.
Kathryn: It is. I have to say, I adore medical information. I adore GP reports because I’m just like, “Right, okay, we’ve got everything here, let’s go ahead with the information from the GP,” and then if something – as I say, isn’t as we expected, it’s like, “Right, something’s gone wrong somewhere in regards to the reports. What’s happened?” And I think the important thing about that as well is that, you know, if it’s something like – that a GP has written something wrong, it’s a case of, “Right, we need to get this corrected so that this person can have this.” And if not, if it is something that maybe the client’s not understood their health as much as the GP maybe sort of like how they’ve relayed it to the person, then it’s really important that that person actually does end up understanding their actual health and the situation that they are facing because if not then that’s not really fair on them either.
But, okay, let’s go on to sort of like a slightly different track then. I think we’re going to be going for hobbies or – as I was reading in an email earlier and it was avocation?
Alan: Yeah, absolutely. Absolutely.
Kathryn: I like that word, avocation but it’s one of those words that I look at it but I have to see it in a sentence because I’m just like, “What on earth does that mean?”
Alan: So absolutely, I wanted to move away from health conditions for this one so – and give an example of someone who’s got a more hazardous pastime or avocation. So this gentleman is 34 years old and a non-smoker. Now, he was in an office-based – well I say an office-based role, he’s actually a lecturer and his main – basically main risk was that he did a lot of mountaineering and basically rock climbing. Now, his rock climbing was usually in the UK, USA and Europe. He would normally do somewhere between two and three times per week albeit largely this was indoor on the indoor walls which usually isn’t a big concern but he would do around about 50 outdoor climbs every single year. Now, in addition to his regular rope climbs that he would do, he also did some scrambling – scrambling is basically usually a lower height or bouldering sort of thing but you would do it without ropes, so obviously you’ve then got to declare that somebody’s maybe climbing without ropes at some point but explain, you know, the whole bouldering, scrambling side of things. For his main rope climb, he would never do more than 4,000 metres. Four thousand metres is kind of like that magical number with insurers where, you know, especially if you’re looking at life insurance, do they climb more than 4,000 metres? And you look at something like The Alps for example and, you know, you can say if someone’s climbing in the UK then they’re not going to be going above 4,000 metres.
Kathryn: I was going to say, is it something like the number four-zero because that’s a lot to do with like people who are working at heights as well isn’t it? Do they go above 40 feet?
Kathryn: Forty feet, 4,000 metres – we like a four, we like a zero, let’s just stick with that.
Alan: Yeah, it’s like you liking even numbers and fives I think, you know, absolutely. It’s the same thing.
Kathryn: Well that’s just sensible.
Alan: So, you know, 4,000 metres – now for life insurance for example, if you go above 4,000 metres you’re more than likely to start incurring price increases than you are if it’s below 4,000. For income protection the effect is maybe not quite as sort of drastic as that because usually what we tend to find with income protection is more insurance companies will automatically say, “You do outdoor rock climbing, you’re doing it reasonably regularly therefore we will exclude it.” That’s not to say it’s the easy route, it’s the common route what most insurance companies will do and do you know what, it makes sense. If somebody’s doing something that’s a little bit out of the norm and it is a higher risk of them having an injury and therefore being unable to work, exclude it, let’s take it out of the equation and, you know, everybody knows where they stand so we can, you know, still offer the insurance to people. The problem is –
Kathryn: I’ve got questions but I feel like they’re probably for another podcast.
Alan: I guess the thing with this is that not everybody wants that, you know. Some people – and a lot of people actually, if you’re told that you can’t have something, people want it even more and it’s like, “Well I should be able to have that actually,” you know, and use the argument of, you know, somebody rock climbing is extremely fit, incredibly healthy, you know, they’ve got to be strong to be able to lift their own body weight and do what they’re doing. They’re getting outside, they’re getting physical exercise, you know, there’s a lot of argument there to say that people doing these activities are actually doing something really good, you know, they’re not necessarily, you know, sitting in a pub drinking for example. They’re out doing something obviously very, very active. So there’s lots and lots of benefits to that as well.
Now, I guess that the good news here is that there is one mainstream insurer who generally will cover people who do hazardous sports without exclusions and they will do this as long as you’ve not had too many injuries in the last few years as a result of it. Now he ticked all these boxes for this. This was great but he was actually caught out because income protection has got some other little caveats and every insurer is slightly different, how long you’ve got to be in the UK, how many years’ income, you’ve got to have proof, you know, how long you’ve got to be with a UK doctor and this gentleman had actually only moved to the UK – basically he was born in the UK, moved elsewhere, then he came back to the UK, then he went over to Ireland for a while and he’d only been back in the UK for 18 months. This insurer required him to have been in the UK for three years so he couldn’t have that policy so we’re then left with saying, “Well actually every other insurance company will default to go on exclusion but you really, really want to be covered for your activities,” because, as you said, he could have an accident, you know, he could have a fall or something could happen and it could stop him from working and he wants to make sure that that’s not the case. He wants to make sure that he feels comfortable if he, you know, if he is doing his activities. He said he’s not a risk taker, you know, he’s not going to go and do anything silly, he climbs within his limits, he’s not going to go and do ice climbing, he’s not going to go and do large unbouldered routes or anything like, you know, he knows what he’s doing and he knows his limits.
Now I’m pleased to say that we were able to actually use a lot of this information and we used actually, you know, the guy was brilliant. You could tell he was a lecturer ‘cos he wrote a page-long essay for us, might have actually stretched onto a page and a half, explaining what he does and what could be construed as high risk and why it wasn’t high risk and we could use this to our advantage. Now, we also had the fact that this client had six months’ full sick pay provided by his employer so we needed a deferment period, so that’s how long you’ve got to wait before your income protection pays out. Now, he was willing to wait because of his sick pay, if ever he really had to, for six months before the policy would pay out. So let’s be honest, if he did have an injury, you know, he put his shoulder out or something like that and he needed surgery or he broke a leg or whatever, is it really going to keep him off for more than six months? And, you know, I guess you’ve got the argument of a big fall and a traumatic head injury certainly might do but actually a lot of the injuries and sprains and breaks will be less than six months off work.
So we used that to our advantage and the fact he was in an office job and not a manual job and we managed to get another insurance company who typically – their standard process is to say an exclusion and they said, “Do you know what? You’re right and we’re willing to look at this and we will offer him standard rates.” And they did and they offered it without an exclusion and this gentleman got £2,000 – an income protection policy, it pays £2,200 a month if he can’t work for more than six months, covers up until retirement age so it’s a full claim on this one and it’s costing him £31 a month, you know –
Alan: For protecting all that income of his, it’s nothing really, you know, protecting that machine in the corner that’s printed all that money for £31 a month is just incredible.
Kathryn: Absolutely. I was going to say, I’m actually going to pose that question that I sort of like – it’s not gone out of my head so I’m going to have to say it. I think one of the things that I think and I imagine that some advisers may think this as well, maybe not all of them and it would be really interesting to see if there’s any underwriters that can sort of like give a bit of an answer to this – is that I think for me as well, when it comes to things like the rock climbing and stuff, you know, I appreciate – I do understand sometimes why there’s going to be exclusions and things like that but I suppose that there’s a time though where, you know, in a sense, the exclusion kind of – the more dangerous it becomes for the rock climbing, the more unnecessary the exclusion is because, you know, you’re kind of bordering into sort of like that thing of, “Like, right there’s no longer going to be an income protection claim here because it’s going to go into a life claim if it’s going to be that dangerous,” and I’m quite interested to sort of like maybe, I don’t know, maybe sort of like see some kind of like understanding behind it as to why it would maybe – it comes that, when I say – it does get to a certain level that it’s not going to be a case of them being unable really to work, it’s – it’s more sort of the just not going to be able to survive it. But it would be interesting to hear some peoples’ thoughts on that.
Alan: Yeah, I think that argument stretches into other areas as well. I mean, don’t get me wrong, I think somebody who’s, you know, rock climbing for example, there is that thing of you could put joints out, you know, you can pull muscles, it’s a strenuous activity on your body so it’s not just the falls, there’s all the injuries that could happen as a result of it. But obviously with a lot of things, like where somebody’s working at heights for example, you know, if you’ve got somebody working on top of, you know, pylons and, you know, electricity towers and, you know, offshore etcetera, you might be 100 metres in the air for example. Let’s be honest, if somebody falls from that kind of a height, the chances are they’re not going to be claiming on an income protection policy, they’re going to be claiming on a life insurance policy. So, you know, the risk as you absolutely say, is different but then there are instances where people do fall from those heights and they do survive and they do have serious injuries as a result and I’m sure there’s probably more to it. But it is a really interesting debate and yeah, likewise, I’d, you know, I’ve had that conversation many a time about offshore workers and the like so I would be interested in the theory with rock climbers and everyone as well.
Kathryn: Absolutely. Just for clarity, I’m not saying that we don’t have exclusions at times, I just – I’m just interested – I’m just genuinely intrigued. It would be really, really interesting to sit down with somebody and to chat through that. I’ve got a couple of underwriters in my head that I’m thinking, “I may actually ask them about it,” and if they’re listening, I’m thinking – I bet they’re thinking, “Oh I really hope it’s not me that she comes to.”
Alan: But if they’re thinking that, then it probably is them that you’re going to.
Kathryn: It probably is, you’re right so when they start getting caller ID from me, no one answers. So I think we’re going to go onto our last case study now and I believe we’re going back to a health condition and one that’s obviously something that I find extremely interesting.
Alan: Absolutely. So this – I wanted to go back to health but I wanted to switch away from physical health and move into mental health. So this is about a client – a female client. She was 35 years old when she approached us and a non-smoker. Now, I will just say that when she was younger, when she was a teenager, she had suffered with ongoing depression for many years and very sadly she’d actually tried to take her own life on three separate occasions, all during her teens over a number of years. Now, it had been really, really difficult for this lady because she’d been – she’d basically been treated for depression and nobody ever looked further than that at the time, you know, she’d never been investigated for anything different, it was always just treated as low mood and depression.
Now, eventually when after the third – basically attempt to take her own life, when she was around the age of 20, she got diagnosed with a condition called bipolar disorder and this is when things changed for her and they changed massively. I mean, we probably had a good hour on the phone talking about this and she, you know, she talked a lot in depth about, you know, how things had affected her and what had actually, you know, happened over the years and how things had changed. Now, bipolar disorder, for anyone who doesn’t know, is basically a mental health condition that can cause, you know, periods of both depression so, you know, almost extreme lows but also extreme elevated mood, so it’s described as lows and highs with it, it’s one extreme to the other. And after, you know, after she’d been diagnosed it was almost like – she described it – that was like the weight had been lifted. She knew what it was – she, you know, and she was able to be treated properly and she was being treated properly for it then. You know, she was getting proper medication for bipolar rather than the standard antidepressants and counselling that would have been given to someone who had low mood or depression. She’d been stable then for many, many years.
Now, one of the things that I’ve quite often found having spoken to quite a lot of clients with conditions like bipolar is that a lot of people are very – and I would say actually the same with mental health conditions as well, especially people who’ve lived with it for a long time, is that they become very, very aware of their own mental health. They know their triggers, they learn what to recognise and almost pre-emptively know if something is going to be a problem. Now, this actually happened to this lady around about seven years ago and she just noticed that these thoughts were almost starting to creep back in again and things that she didn’t like and she recognised – she thought, “This isn’t right and I need to get some help before this gets worse.” So she checked herself into hospital at that point and this – as she described it to me, was her pre-empting a problem and she went into hospital, she got treatment, she got care, she didn’t need time off work as a result of it, she didn’t need massive changes to medication and she was out and carried on her life as normal. So for her, this was – it was her really just – almost just taking control before something became a problem, before it came too worse – became too bad.
Now, most income protection insurance companies will just decline people for bipolar. As soon as you say a client has got bipolar disorder, it’s an immediate no but there are a few who will consider and usually what they like to see is a period of stability so no hospital stays for example, you know, no major flare-ups, no time off work but what I would say is when you’ve got a circumstance like this and someone who maybe pre-emptively talks to somebody or rings the doctors or the psychiatrist or asks for an increase in their medication, where it is pre-emptive like this and they are really almost trying to stop something before it becomes a problem, you can speak to the insurance companies about this and explain this and this is what we did for this lady.
Now, I am really pleased to say that we were able to offer cover for this lady. It did come with a mental health exclusion but I don’t think that anyone would expect it not to do, you know, because at the end of the day she does have a lifelong condition and she was fully of acceptance of this and we were able to offer her a policy that would pay her £1,600 a month, so £1,600 per month if she couldn’t work for more than 13 weeks due to ill health. Again, she was working to a budget so we introduced a five-year claim cap on this. We did restrict that claim down a little bit to five years and the premium was around about £20 per month for her. So again, you know, it was good protection, yes it did exclude something but something that she was fully accepting of and understanding of, but she was still covered for everything else. You know, if she hurts her back, if she falls down a flight of stairs, if she gets lupus which we discovered, you know, we talked about earlier, one of these other conditions, or she has cancer or a heart attack and she can’t work, there’s so many other things that she could claim on and she was still able to get that policy, even though a lot of insurance companies would say no without even looking at the circumstance.
Kathryn: I think this is one where I imagine a lot of people can understand I have a lot of opinions of. I think, you know, I think that’s just absolutely an incredible case study that, you know, you got there and you talked through. Some of the things that sort of like stand out for me with this is that I – obviously I do help a lot of people with mental health conditions and I have to say, you know, when I speak to people and sometimes, you know, it will be a case of maybe on a life insurance that it could be like a permanent self-harm or suicide exclusion or, you know, like in income protection where there’s possibly going to be a mental health exclusion, the majority of people – and I really do mean a majority – and there have been times where there’s been a couple of people who aren’t too sure of it but the majority of people have been absolutely fine with those exclusions because they’ll say, “I’m in a completely different place to where I was when I was being diagnosed, you know, that’s not going to happen again. That’s not a concern for me.” Or they’ll say, “I’ve got this health condition but it’s never actually stopped me being off work so I don’t need to be covered for it because it’s never stopped me before and I’m in a much better place with it than I’ve ever been before. So I’m fine with that.”
I think that one of the things that always confuses me – and again, you know, more than – obviously it would be really nice to sort of like chat to people as well, you know, to sort of hear the background side of things, is I get confused when, you know, sort of like companies offering income protection say that they’ll offer income protection to people with mental health conditions with a mental health exclusion but then they just outright decline people with bipolar disorder or some of the other mental health conditions that are considered to be of a stronger nature. And that really confuses me ‘cos I think well if you’re excluding mental health then what’s the difference between excluding it for someone who has anxiety and someone who has bipolar disorder?
And the only thing that I can think of is that it’s something to do with the medication or maybe there’s a concern as to the understanding and the cognition of the person who is arranging the policy as to whether or not they fully understand what they’re arranging. Maybe that’s a complaint risk. Now, I think that a big argument for that, if that is the concern then, you know, offer the policy but only offer it through advisers ‘cos then if there’s a complaint risk it’s going to be on the adviser but also, you know, there’s plenty of people that I know who have, you know, bipolar disorder and other conditions and it doesn’t stop them working and they have the same risks as anyone else if they aren’t able to work. I do find, you know, these – like you said, the blanket exclusions that we get sometimes in all the, you know, all the different types of policies – can sometimes feel a little bit stern, a little bit extreme at times.
But I know that – actually one of the things that we’re maybe going to chat about as well at some point is sort of like this – the sort of like infamous three strikes rule when it comes to income protection, where sort of like if you have three things on the application, with quite a few insurers, once there’s three things on there, that’s it, you’re out, there’s no more income protection for you and it may even be the smallest of things in some ways that can do it. It’s not everyone obviously but I think you wanted to maybe have a little chat about that?
Alan: Yeah, absolutely. So I guess first of all I’ll just say, I mean I think income protection underwriting has come such a long way. I mean, before I got onto the three strikes thing, you know, so I remember, you know, writing these policies 10, 15 years ago and the list of exclusions was massive, the declines was huge, you know, it was definitely a lot harder in the past to get cases through and I think, you know, how good these policies and how flexible they are now is just absolutely brilliant. And actually, even on the mental health underwriting side, we are making a lot of progress. It’s not easy and, you know, I think we as underwriters – advisers, need to understand that it’s not easy. It’s probably not as easy as a physical condition to underwrite because you’re relying on how somebody feels and how much somebody talks about something.
There’s this whole argument isn’t there – I mean, you know, if we compare us, you know, I use this example quite a lot, but I don’t particularly talk about mental health, I bottle things up and I don’t talk about what’s going on and you’ll know this very well, eventually what happens is something triggers it and it pops and all of a sudden it all explodes out in one go and that’s not particularly healthy but actually, you know, I could probably go in and buy income protection without a problem because I’ve never talked to my doctors about that and that’s kind of just me and what I do whereas, you know, somebody who talks about their mental health and even if I look at you, Kathryn, with this and so somebody who’s more actively talking about it and aware of it and far more than I am, you would get an exclusion straight away. But actually you’re in my opinion a much lower risk than me who bottles everything up and never talks about it.
Kathryn: I think, you know, I’ve spoken to clients before and I think it is fair to say that, you know, with some people they do feel as though they get punished for being actively on top of their mental health and on top of being aware of their triggers and maybe speaking to somebody. Like you say, you know, it’s kind of like, well what’s safer? Is it safer for the person who is actually speaking about it and taking preventative action and one of the main things that we say when it comes to income protection is – and other things is, you know, it’s sort of like if you’re going to get to a point where there’s maybe going to be a claim, even before that stage, speak to the insurer, get in touch with the support services, you know, do the preventative actions to try and prevent there being a claim and people are self-doing that, they’re self-managing that in their own lives and then it’s kind of kicking them in the bum when they’re trying to get insurance.
Alan: And I – do you know, I do think we’re – it is hard and, you know, credit to insurance companies who are really trying to get this right but I think what’s happened over this last eight or nine months with Covid and the lockdown is going to really forced the hands of everyone to make these changes quicker because over the next 12 months it’s going to be hard to find someone who hasn’t experienced some sort of mental health difficulty, you know, over the last year if we’re all going to be completely honest.
Kathryn: A brief thing – sorry, just to pick up on that very quickly, I think that’s hard because it’s like, you know, I can imagine quite a few people there will be going, “Well I haven’t had any mental health difficulties, you know, yeah, lockdown’s been tough and there’s been the odd days I’ve been a bit stressed or anxious,” and then it’s a case of, “Well okay then, so actually that means that you do have to tick yes on the forms to say that you’ve been stressed and anxious,” and so it’s –
Alan: Depending which ones you answer, yeah –
Alan: There will be some get picked up, absolutely.
Kathryn: Exactly. So it kind of goes back to what we’ve been saying for the last few years or so in regards to these questions and I’m not just sort of like saying – I feel like we’re becoming like a – you’re really pro and I’m really anti what’s going on and I don’t want it to seem like it, I’m just obviously – I’m trying to pose different arguments and stuff and different suggestions but it does come back to that thing, you know, like, you know, that question of, you know, “Have you ever had stress or anxiety?” At the end of corona virus, if anyone can say no to that, that in itself to me is kind of like an indication of a mental health condition in itself because, you know, we’ve – how can you not have felt at some point stressed or anxious? You know, not being able to go out to the shops, you know, forgetting you’ve got a mask, you know, and you’ve not got a mask in your pocket and then having to go home and being stressed because, “I’ve had to go back blimmin’ home to get that mask to be able to go into the shop,” you know –
Alan: Is that a reference to me with the opticians the other day when I got half-way down –
Kathryn: It is.
Alan: Then realised I’d forgotten and I had to run back and I ended up a big mess when I was finally back down there?
Kathryn: Yes that is absolutely in reference to you.
Alan: Thank you.
Kathryn: Most of the things I talk about are in reference to you. Subtle digs. But , you know, there’s – it would be very, very – I think before corona virus it was very – it would be very strange to find someone who could answer – honestly answer no to having ever had stress or anxiety. There’s taking your car exams, you know, your driving test, there’s taking, you know, your GCSEs, there’s going on your first date with somebody, you know, there’s so many things where – and it’s kind of like that definition of what is anxiety, what is stress, what is disclosable, not disclosable? And I know again we’ve gone onto a completely different line of discussion here but you started talking about mental health!
Alan: Well you kind of forget I’m your husband – yeah, you got your husband on a podcast.
Kathryn: I know!
Alan: What else do you expect?
Kathryn: Well you were about mental health, you know, this was going to be – this is going to be – like I was going to say, I could be here for hours just going on this subject so I will stop but no I think, you know, as you say that there’s going to have to be some kind of reaction to all of this because the questions as they are posed at the moment, I would find it very hard to think that if someone said no to that they weren’t possibly in danger of potentially non-disclosing.
Alan: I guess if I pull it away from the mental health side so we won’t talk about this too long. You also asked me about the three-exclusion rule so three strikes and you’re out as we call it. So there is – and not everybody does this but there is this – I guess sort of approach to underwriting income protection with some insurance companies where you have a limit of three risk factors that can be invoked on an income protection policy before it’s classed as not fair to the client and therefore declined. I’m going to just say, not everybody does this but we’ve, you know, we’ve been caught out by this before and have seen this in action and if I pull one of the daftest ones, you know, I guess for this – so we had a client who had a small price increase because little bit heavier, you know, slightly higher BMI so 25% increase, 50% increase on their body mass index. They had an exclusion because they were doing some sailing so basically doing yachting etcetera so they wouldn’t cover them for sailing and then they’d had a problem with their finger. Now I can’t remember exactly what it was or which finger it was but they put an exclusion on the finger and that finger exclusion pushed it into a decline because it was the third risk factor. Now you might say, “Well that’s ridiculous, that’s just a technicality,” and yes, do you know what, it was and it was a hard and fast rule with that specific insurer that no matter what, that was an out and that was a no and we can’t offer. We pulled it and we went to a different insurance company and it was accepted, it was absolutely fine.
But there are instances like this where you might get three exclusions or you might get a loading and then a couple of exclusions and, you know, yes it’s always going to be worse if they are big exclusions like musculoskeletal, mental health for example which, you know, account for the majority of income protection claims but sometimes these can be smaller exclusions. Exclusion on the knee, exclusion on the elbow and then, you know, a mental health exclusion for example. Well my argument is, is there are still lots of things that that customer could claim on and if we declined that insurance policy for the customer, we’re not just excluding them for claims by those conditions, we are basically excluding them for claims by any condition so if that client got cancer, heart attack, they had a stroke, if that client fell down a flight of stairs or was in a car accident, they can’t claim because they were never able to buy that insurance policy so it’s one of those rules that I’m sure there’s a bit of background there and I’m sure there’s a reason for it and it’s come from somewhere but I think in the world we live in today where we do get bumps and lumps and niggles and things checked out and we do go see the physio and we do go see the doctors to get things ironed out, putting such limits on these exclusions, it definitely does restrict access and it’s one of the things that does still grate a little bit and I think it’s – I would just love to see that removed and I’d almost just love to see everyone on an income protection – get individual consideration, you know, I guess it stretches as far to say that everyone should be looked at and considered as a person and rather than just looking at those specific conditions. If that makes sense?
Kathryn: I think that makes perfect sense and I think it’s really powerful what you’re saying there in a sense so, you know, you’re not just excluding them from claiming on those conditions, you’re excluding them from any condition and I think sort of taking that a bit further as well, it’s kind of like that thing of who’s to decide what is right for that client? So, you know, if you’re saying, you know, if someone’s saying to the client, “Right well actually we’re going to exclude you for your left knee, your right shoulder and for your back so actually we’re just not going to offer it to you,” well who’s to say that that’s not what the client’s quite happy to have? You know, in a sense, you know, who – why can’t that person in a sense be considered to be adult enough to make that decision as to sort of like, “Well actually there is going to be quite a few exclusions on here but I’m still covered for cancer,” as you say, cancer, heart attack, strokes, possibly develop Parkinson’s and all these conditions that we are seeing being diagnosed more and more.
I think the latest statistic is something like one in two people – it could be one in two people will be diagnosed with cancer and that’s sort of like the latest statistics and I mean, a lot of people are worried about that and, you know, if they’ve had, you know, if they’re super fit but yes they’ve, you know, they’ve been playing sports so they’ve had, you know, tennis elbow and they’ve done their knee in and different things like that, it seems really, really unfair that they then wouldn’t be able to get the cover, you know. As long as it’s very, very clear again to them and as I say, if there is that worry of a complaint risk then, you know, use advisers, you know, to offset some of the complaints that, you know, sort of the potential complaint risk that’s there. But I think, we’re sort of like coming towards the end now and I don’t think we could finish this without talking about the 7Families, if you’d like to have a little bit of a chat about that?
Alan: Yeah. I mean, so just very, very briefly and whenever I talk about income protection, you know, for me being able to reference the 7Families campaign is just absolutely incredible. I won’t go into too much detail because I think probably most people have heard of it but if anyone hasn’t heard of the 7Families campaign, it’s something that happened years ago where basically insurance companies all grouped together to provide income for seven families who had been struck financially due to illnesses such as strokes for example and to show just how giving a year’s worth of income to these families could make a huge difference. But actually one of the – I guess biggest things that actually came from it and, you know, you can go to the website which is 7families.co.uk and you can watch some of these videos but one of the biggest things that actually came out was the value of the support services. So yes the money was great but actually getting some of these support services and other benefits that people don’t necessarily think of or see what we call value added benefits, you know, support services from nurses and counselling and help in recuperating and recovering, how actually they were just as important and if not more important than the benefit themselves.
So I would just say for anyone who hasn’t – I mean, they were done some years ago now but they are timeless and they are really good case studies. We’ve embedded them on our website for customers to view and see. We use them for staff training and I think that the last couple, bless them, have been in tears after watching at least one or two of them. It’s – they’re incredibly powerful stories to just really highlight the importance of what we do in protecting peoples’ income and just how important having that income can be when everything else has been turned on its head, you know, can be so I would just encourage anyone who hasn’t watched them, have a look at the website and do check them out.
Kathryn: I think an important thing with the 7Families as well, they’ve just done like a 7Families revisited so they’ve now gone back and done new videos with the people to sort of see like how their lives have progressed but I think there’s like a twofold thing with the 7Families in the fact of, you know, you sort of like – you’re looking at this and you’re just like, “Wow, this is what income protection can do, look how amazing it is,” and then there’s that other side of it where it suddenly hits you and you go, “Wow, they missed out on this and yes these seven families have been extremely – not fortunate because of their situation, but they’ve had the opportunity to have this income protection in a sense given to them for a short period of time, but they’ve missed out and how many other people are missing out and don’t have this?” And you can see in the videos just how much the help it gives to the person who has suffered, you know, a very, very serious illness or accident that’s led to them being unable to work and also to the people that are caring for them and how it’s probably helped them to recuperate and get into a then – I know it sounds terrible, to the new normal ‘cos that’s what everyone says now but, you know, their new normal way of living far quicker than if they didn’t have the policy. So I think there’s multiple layers to watching it and you’re right Alan, sort of like it is something that I assigned to our team to watch and I have had quite a few of them say to me, “Please don’t send me any more of these, I can’t cope, I’m just so emotionally drained now,” and in a good way in sense of they’re saying it is just so powerful and hopefully people who are listening who now know about them will be able to see that as well.
But we are at the end now so thank you to everybody for listening and thank you for joining me, Alan. I’m going to be back next week with the final episode of season two at the end of 2020 and I’m going to be speaking to Matt Ramm and we’re going to talk about his career as an underwriter which has been spanning 40 years and seeing about – obviously as I say his career but also how underwriting has evolved over this time so I’m going to be absolutely fascinated to hear about that. If you’d like a reminder of the next episode please do drop me a message on social media or visit the website www.practical-protection.co.uk and don’t forget that you can always get a CPD certificate as well by going on and claiming and doing a little form that’s on the website too. So thank you very, very much for joining me, Alan.
Alan: You’re welcome. Thank you for having me.