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Royal London pilots life cover for people with severe mental health conditions

Written by: Emma Lunn
The insurer has been trialling a mental health underwriting philosophy using a panel of adviser firms which specialise in sourcing cover for customers with a history or mental or physical health conditions.

Royal London is piloting life cover for people with severe mental health conditions and says 75 per cent of applicants have been successfully offered insurance. Those who have been offered cover so far include people with conditions such as psychosis, schizophrenia and severe post-traumatic stress disorder (PSTD).

The pilot, which launched in March, has seen Royal London working in partnership with three risk specialist adviser firms: Cura, Moneysworth and The Insurance Surgery.

Mental health conditions are the most commonly disclosed conditions by customers applying for protection cover. Around one in 10 (9.5 per cent) customers who have applied for a Royal London protection product say they have or have had a mental health condition.

While 95 per cent of those customers who disclose such a condition are offered cover, with around 80 per cent paying premiums at standard rates, a small proportion are declined or postponed. This leaves those who are uninsured feeling that protection is inaccessible.

The Royal London pilot is designed with a new underwriting philosophy to offer cover to those with severe mental health conditions who would traditionally be declined a protection product.

As a result, Royal London has successfully offered cover to 75 per cent of applicants who would typically be uninsurable. One in 10 (10 per cent) of applications have been postponed with a possibility of being offered cover at a later date. The remaining 15 per cent were declined due to the applicants’ condition being too severe or unstable.

The pilot is being offered through specialist advisers and medical evidence is required for all applicants, with online decisions on applications being switched off. A specialist group of underwriters, who have access to a consultant psychologist, are assessing the applications to discuss what can be complex medical circumstances.

Craig Paterson, underwriting and claims philosophy manager at Royal London, said: “Our underwriting philosophy as a protection provider is to offer cover to as many customers as possible. With mental health being the most commonly disclosed condition for Royal London customers, we wanted to explore how we can provide cover for those with a severe mental health condition.

“Through the pilot we have successfully managed to offer protection to individuals who would traditionally be declined life insurance cover. The response from customers and advisers has been overwhelmingly positive and we’ve seen high take up rates for cover despite the underwriting process being longer.”

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