5000 Norwich Union customers received letters about critical illness insurance policies
In an attempt to determine whether insurance customers with critical illness coverage withheld information that could affect their policy, Norwich Union, a leading insurance company in the UK, recently contacted 5000 of its customers with such policies. The reason for this massive mailing was to determine if any of these customers did not supply the correct information when they initially took out the policy, which could, in fact, make the policy null and void.
The letters were mailed to a random sampling of customers with critical illness coverage as a pilot scheme. If the scheme is successful, Norwich Union intends to contact all of its 2 million customers with critical illness policies. This scheme arises from reports that over the past two years that more than 20% of claimants of a critical illness policy had their claims rejected. The reasons for the rejections varied, from claiming for diseases that were not covered by the policy to not providing the correct information when taking out the policy in the first place.
The design of critical illness coverage is to pay the policyholder a lump sum amount if there is a diagnosis of one of the critical illnesses specified in the policy. Even if policyholders make a full recovery from the illness, the money is theirs to keep. However, there has been a lot of negative publicity over this type of insurance coverage due to the large number of rejected claims.
Norwich Union states that its pilot scheme of contacting customers regarding the information they provided for the policy is an attempt to get customers to update their information in the event that they need to make a claim. According to one company official 'We want to be able to clearly advise people . . . how to proceed if they believe they may have missed something off their application form. We feel this is the right approach to try to help customers prevent non-disclosure in the event of a claim.'
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