When you take out any insurance, insurers will first work out your risk level so they can decide whether or not to insure you and, if they do, how much it should cost. This is what’s called the ‘underwriting’ process.
Income protection policies cover you in case you can’t work for any health reason. Since it’s a health-related insurance product, insurers will need to know about your health history before agreeing to cover you. It’s important to be completely honest and accurate during this medical underwriting process to make sure you don’t invalidate your policy further down the line.
If you disclose that you have an existing condition like asthma when applying for income protection, what happens next depends on how severe your condition is. If it’s very mild, you might not be affected at all; if it’s more severe, you might find it more difficult or more expensive to get insured. This is because insurers may consider you higher risk to insure (so they’ll charge more to carry that risk) or too high risk (so they won’t be willing to insure you at all).
Can I buy income protection if I’ve got asthma?
You should be able to buy income protection if you’ve got asthma, unless it’s particularly severe. Anyone who applies for income protection has to answer questions about their health and lifestyle during the medical underwriting process, which includes questions about their:
- Personal health history
- Family health history
- Height and weight (BMI)
- Smoking status
All of this will be taken into account as the insurer evaluates how much of a ‘risk’ you are and how much you should pay to be covered. Getting help from an adviser can really help if you’ve got a health condition like asthma, as they’ll quickly be able to filter out the insurers most likely to accept your application and who offer the best terms for you and your circumstances.
What will insurers ask about my asthma?
If you’ve got asthma, it’s likely you’ll be required to provide the following info during the underwriting process:
- How frequently you experience symptoms
- How frequently you need to use an inhaler
- What treatment you have, including inhalers and steroids
- Details of any hospital admissions in the last 5 years
- Details of any time off work needed due to asthma
- Details of how asthma affects your daily life
How will my asthma affect my income protection application?
Typically, there are a few possible outcomes when you apply for income protection but disclose a pre-existing health condition like asthma. These include:
- Your application being accepted as normal with standard pricing rates – i.e. the same as they’d be for someone without asthma (this usually only happens if your asthma is mild)
- Your application being accepted but with a ‘loading’ on the price – i.e. your rates will be higher than they would be for someone without asthma (this usually happens if your asthma is moderate)
- Your application being accepted but with an exclusion relating to your condition – i.e. you won’t be able to claim if your income loss is caused by asthma or any related respiratory conditions (this can happen if your asthma is moderate)
- Your application being declined (this tends to happen if your asthma is severe and the insurer deems you too high risk to cover)
Why are some people too high risk for insurers?
It’s true that having an existing health condition like asthma could make you ineligible for products like life insurance and income protection insurance, though this usually only happens in extreme cases. The reason insurers exclude some people on the basis of their health is so that they can offer a product that is fairly priced for the majority of people.
What’s the logic behind this? People with an existing health condition (especially if it's severe) are more likely to claim on health-related insurance products, so insurers would need to charge more in average monthly premiums if they were to carry the risk of covering these people.
A higher rate of claims by people with severe health issues would effectively drive the price up for everyone. This is deemed unfair by insurers, which is why they tend to decline covering people with severe health issues.
Buying income protection if you have asthma: key facts
- Insurers generally categorise asthmatics into three categories: mild, moderate and high; the category you’re in will affect the price of cover
- Insurers will add a higher loading to the price if you have asthma but you also smoke; and the more cigarettes you smoke per day, the higher the loading will be
- Having asthma will affect the price in a similar way when you’re buying income protection as when you’re buying other products like life insurance and critical illness cover
How asthma categorisation works
You’re likely to be categorised as mild if:
- You have asthma symptoms less than once a week
- You haven’t visited hospital for asthma in the last 5 years
- You haven’t needed time off due to asthma in the last year
- You don’t need oral steroids to manage your asthma
Being categorised as mild usually means you won’t have a loading added to the price of your policy (unless you smoke). In other words, you’d pay the same as someone of a similar profile who doesn’t have asthma.
You’ll be categorised as moderate if:
- You experience 1-2 asthma symptoms a week
- You’ve visited hospital for asthma no more than twice in the last year
- You’ve needed some time off due to asthma in the last year
Being categorised as mild usually means you’ll either have a loading of 75% added to the price of your policy or your condition (and a few other respiratory illnesses) will be excluded from your policy. In cases where a loading is added to your premiums, the loading amount is likely to be higher if you also smoke.
You’ll be categorised as high if:
- You experience asthma symptoms daily (or close to daily)
- You’ve been hospitalised for asthma more than twice in the last year
- You’ve needed time off due to asthma in the last year
- You use more than an inhaler to manage your asthma
Being categorised as high usually means the insurer will need further medical information from you before making a decision about your application. If they decide to insure you, a loading will be added to the price – making it more expensive than it would be someone of your profile without asthma. There’s also a chance the insurer will decline your application altogether.
Why it’s important to disclose your asthma
When applying for income protection, it’s extremely important to answer all the health questions honestly. If you don’t disclose that you’ve got asthma when you have, regardless of how mild it might be, you risk invalidating your policy and it not paying out in the future (this is the most common reason for claims not being paid out by insurers).
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- You can apply for income protection even if you have an existing health condition like asthma
- If you have asthma, you must disclose it during the application process, even if it’s mild, otherwise you risk invalidating your policy in the future
- If you disclose your asthma while applying for income protection, extra medical information may be required from you during the underwriting process if your asthma is severe
- Depending on how mild or severe your asthma is, insurers may accept your application as normal; accept it but charge a higher premium; accept it but exclude your condition from the cover; or decline your application