Payment Protection plans

Question: Hi, I am just consolidating some debt and I am wondering whether to take out payment protection. The cover my bank offers does not ask for existing conditions although I presume they would check. Is it worth taking it out if I have to go on disability due to RSI? The latter seems to be an increasing possibility. I have been off work for almost 3 weeks now and am having a bad time with my shoulder. Reading up on sympathetic dystrophy scares me all the more. I am so worried about how to cope with the new job. What worries me the most is that with the pressure of a new job, if my arm is bad, I’ll make myself continue instead of risking displeasure and stopping.

Answer 1: I wish I had taken them out. I’m in the position where I’m being medically retired at the beginning of April with a not very large pension, plus incapacity benefit (if I’m lucky) and my loan has a while to run! It did not occur to me that I would have to give up work (head in the sand syndrome) – for how long I don’t know, but I’ve been off sick for 6 months now and almost anything that involves moving the wrists and fingers still triggers off the pain. ….What jobs are there where you don’t need to move the wrists and fingers!? Somehow I will survive but it would have been nice with hindsight if I had taken out a protection plan. Life would have been a lot less worrying than it is now.

Answer 2: I think you’ll find the protection doesn’t cover existing conditions — but if it does, it’s certainly worth taking it. I didn’t have mortgage protection insurance because my building society didn’t suggest it — it seems they forgot! — and at the time, it was getting a bad press. (Something to do with when it’s paid out.) I really lost out by not having that. I had loan protection too but it didn’t cover my disability retirement (?!), it would though have covered extended time off work. I think most policies do cover retirement and I was just unlucky.

Answer 3: I tried to take out insurance to cover my mortgage etc., in case I had to take time off work sick, long term, with anything not just RSI. I couldn’t find an insurance company that was prepared to cover me because I’d had RSI. I eventually found one company that was prepared to cover me but it was going to cost me a huge amount and they excluded the RSI. This was about two years ago when I was completely pain free and I thought the RSI had disappeared. (It came back last year).

Answer 4: It may be a good idea if the cost is bearable. It depends if you think the likelihood of giving up work is real enough to warrant the cost, and how much it would cost you to repay the debt/interest if you had no other income. BUT – I would be very surprised if they covered pre-existing conditions. Read the small print VERY carefully… if it looks OK I might even just gently check with them in writing or at least verbally and keep a note of the person’s name and time of conversation – just ask if they have any restrictions on pre-existing conditions, etc. without mentioning whether you have any or not… There might also be a clause about having to work so long for an employer first… Also – I would shop around – the bank doesn’t always come in cheap (though it might be worth it if the policy is nicely worded) – perhaps check with an independent financial adviser.

Answer 4: Just a quick note: I already had diabetes when I took out my mortgage & therefore could not be covered by a protection plan. I had to give up work (chronic tendon probs) with an 11 year old daughter & mortgage to pay. Incapacity Ben, DLA & Industrial Injuries are not means tested, therefore I could fall back on my small amount of savings when absolutely necessary. With careful planning, we managed – just!

Answer 5: Not sure the law works like this – otherwise the insurance industry would have a problem with any of the exclusion clauses that they impose on all sorts of insurances… But even if it was discrimination and they couldn’t refuse it altogether – what sort of premium level do you think they’d impose for a very bad risk and much increased (almost certain?) likelihood of claim???

Answer 6: Isn’t refusing insurance altogether on grounds of RSI tantamount to Disability Discrimination? I’m not suggesting that we all run out and begin litigation against every company that refuses us insurance (or maybe I am?), but if the way RSI affects us is covered by the DDA 1996 then refusing insurance on the grounds of that illness is illegal… just food for thought.

Answer 7: Given I wouldn’t qualify for DLA… Like I can really afford to pay my mortgage for 9 months without any income…!

Answer 8: As I understand it, the DSS will pay the interest portion of mortgage repayments while you are off sick. There is a qualifying period though of nine months UNLESS you get Disability Living Allowance, or took out your mortgage before 1986ish. There is help for all of you who have mortgage repayments… Go and seek advice from your local DSS.

Answer 9: I think you’ll find there is a case for suggesting that point blank refusal on the grounds of an illness covered by the DDA would be illegal. IF our illness is covered by the DDA then an insurance company making an exclusion of that particular illness would be deemed as a reasonable adjustment to ensure that we STILL benefit from cover in case of other illnesses/accidents (God forbid). For example, denying insurance for other ‘accidents’ or ‘illnesses’, on the grounds of tenosynovitis (which MIGHT be covered by the DDA depending on severity) would be a clear case for discrimination as it is denying a disabled person the right to an insurance policy enjoyed by an able bodied person. What happens if I develop ‘cancer’? Is there an increased likelihood that I will develop cancer because I have WRULD? Does my disability make me a higher risk? Is it fair that I can not insure myself against AIDS because I have tenosynovitis? Does my disability make me a higher risk? What happens if I am injected with infected blood etc… What happens if I get hit by a bus and die… Because I couldn’t get life insurance I’ll leave massive debts behind and my family will lose the family home as a result? I am sure there is a good case there, but of course (as with EVERYTHING else) the argument runs much deeper than this and is much more complex as is always the case when it comes to interpreting law. I just thought I’d ‘chip’ in my two pennies worth as I am sick and tired of being refused accident insurance and health insurance on the basis that I have a disability, and yet when I tried to make a claim on my mortgage payment protection policies I was told I wasn’t disabled… Why is it that insurance companies ALWAYS get away with this kind of hypocrisy?

Answer 10: I have never been refused a policy but have always had to have pre-existing conditions excluded from cover where such a clause exists. But I do still benefit from cover except in the case of pre-existing conditions, and they are covered after the policy has been held for a certain time so long as I have not consulted a doctor about them in the last two years. (This is an example: my policies differ slightly in the way they treat pre-existing conditions.) So (for example) my new knee condition is covered even though I have back problems that are not. It has never happened to me to be denied insurance for other ‘accidents’ or ‘illnesses’, on the grounds of my pre-existing condition. And my accident insurance is unaffected by pre-existing conditions — but there are sub-clauses excluding accidents involving prescribed medicines, these of course apply to everyone who has the policy. I don’t really understand how such blanket refusals can occur here (I always thought they primarily occur in the US). But here I imagine most people are in my position of having no cover for pre-existing conditions (defined as conditions that occurred in/have been present during the five years before taking out the policy) for a set amount of time after the policy is taken out, and where accident insurance is concerned, quite simply covered, with standard exclusion clauses that apply to all. Loan protection policies are slightly more complex. I forgot to warn people that if they have to take disability retirement, they may be told they are voluntarily unemployed and so not covered. (I said, “Think again” and they did, and told me I was covered because – now hear this – one of the conditions that had led to my leaving was already present… But that was cover for a specific loan so it didn’t help as much as mortgage protection would have. I, like you, couldn’t pay my mortage for that long… as I had no new job on the horizon, I used most of my lump sum to pay off the mortgage: a gamble that proved to be correct (mortgage rates remained high for more than 18 months).

Answer 11: Well I rang Natwest Insurance Services and said the following “I find it hard to believe that you are willing to cover me for an existing condition.” They said that they do that all the time. So I said “Does this mean that that you will make this an issue if I were to put a claim forward?” They said “No, for example, they gave a loan to someone who wanted to have a private operation. Knowing that he was going to be in hospital, they paid for the months the person was in hospital”. So I took out the loan protection. If I feel I am managing my new job without disabling pain (seeming more and more unlikely), then I can cancel it in a year as I am forking out a lot for my loan.

Answer 12: I suppose that they were just treating it the same as any other pre-existing condition although saying that I was virtually pain free and as far as I was concerned it didn’t exist anymore. I also suffer from slight asthma and they didn’t exclude that although I had one really bad attack years ago.

Answer 13: Yes, I think it is treated exactly the same way as other conditions. I have various pre-existing conditions (!) and exclusions apply to them, where they do, in exactly the same way. RSI is just another one. I suppose if my new knee problem could be related to any other condition I have it would be excluded. But the insurers didn’t try to relate it to my back. They have standard questions that treat each condition separately from the others. Policies do vary enormously — as I have already learned to my cost, as I may shortly learn (a different policy) again to my cost. — I’m quickly losing money I don’t have… But I’ve never seen any sign that RSI was regarded as anything special or different or sinister.

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