Deferral and decline

These two outcomes get lumped together and they should not be. A deferral is a timing decision. The underwriter is saying that something in your file is unresolved — a test result outstanding, a recent operation, a medication changed last month, a pregnancy in progress — and it cannot price the risk sensibly until that resolves. It invites you back at a stated point. Most deferrals end in an offer.

A decline is a different thing. It means this insurer, applying its current manual and its current reinsurance treaty, is not prepared to write this product for you at any price today. It is not a statement about your health, and it is not a statement about the market. It is one company’s answer on one day.

But it is an answer that gets recorded, and every subsequent application asks about it. That is what makes a decline expensive out of all proportion to the underwriting decision behind it. The second insurer now starts from the knowledge that someone else said no, which makes it more likely to order full records and less likely to take a marginal case on trust.

A decline is a setback, not an ending. What matters is what you do in the following few weeks.

1. 1Ask for the reason in writing. Insurers will generally tell you or your adviser what drove the decision — and it is sometimes something correctable, such as missing information or an out-of-date specialist letter.
2. 2Fix what can be fixed. If it was a gap in evidence, get the evidence. If it was a recent event, the answer may simply be time.
3. 3Do not immediately apply somewhere else. A second decline is worse than the first. Have an adviser pre-assess the case anonymously across the market before another formal application goes in.
4. 4Consider a different product shape — a lower sum insured, a longer waiting period on income protection, TPD instead of income protection, or an accelerated rather than standalone benefit.
5. 5If nothing is currently available, diarise a review. Appetite changes. A condition that is uninsurable this year is sometimes routine in three.

Why an anonymous pre-assessment matters

A pre-assessment is a written summary of a person’s history sent to an underwriter without identifying them, asking what terms would likely apply. No application exists, so nothing is recorded and there is nothing to disclose later. An adviser can send the same summary to several insurers at once and compare the indications.

The alternatives when standard cover is not available

• A different insurer entirely. Appetite for the same condition varies and moves as treaties change.
• A smaller sum insured, which sometimes falls inside an insurer’s acceptance limits where a larger one does not.
• Accepting an exclusion or a substantial loading, if offered, rather than holding out for standard terms.
• A longer waiting period or a shorter benefit period on income protection, which materially reduces the insurer’s exposure.
• TPD or trauma cover where income protection is unavailable, which insure a different and more defined event.

These are the details that decide whether the cover does what you expected. Read them before you compare on price.

• Whether the outcome you received is a deferral or a decline. The language on the letter is not always plain.
• The exact reason, in writing, so it can be addressed rather than guessed at.
• Whether a deferral has a stated review date, and what evidence is wanted when you return.
• That you must disclose the outcome on every future application, including a deferral or special terms.

Every New Zealand insurer writes declined and deferred applications to its own wording, and the words are where the money is. Two policies that look identical on price can pay very differently when it matters. Closing that gap is the entire job of an adviser.

• Anonymous pre-assessment across multiple insurers is the single most valuable thing an adviser does for a difficult case, and it is not available to you directly.
• An adviser knows which insurers currently have appetite for a given condition, and which have recently tightened.
• Where a decline has already happened, an adviser can present the file properly to the next insurer rather than letting it arrive cold.
• If nothing is placeable now, an adviser can diarise the case and revisit when appetite shifts.

There are three ways to buy life cover in New Zealand, and they are not equivalent. You can buy direct from one insurer, which means you see one product range and one underwriting appetite. You can buy through your bank, which usually means a single insurer’s product sold under the bank’s brand, often with narrower definitions. Or you can go through an adviser, who quotes several insurers at once and is required to put your interests first.

The premium you pay is the same either way. Insurers build adviser commission into their pricing whether or not an adviser is involved, so going direct does not get you a discount — it just removes the person whose job is to argue your corner at application and at claim time.

• An adviser can see which insurer is currently taking your health history on standard terms, and which one will load or exclude it.
• An adviser can structure cover across two insurers if that produces a better outcome than putting everything with one.
• An adviser handles the underwriting back-and-forth, and is the person who chases the claim when a family is least able to.
• An adviser has to document why the recommendation suits you, which is a written record you can hold them to.

We are a referral service, not an insurer. We do not quote premiums and we do not sell policies. What we do is put you in front of one licensed New Zealand adviser who can compare the market properly.

1. 1

   You tell us what you are looking at

   The form takes about a minute. Nobody asks for your medical history on a web form — that conversation happens with the adviser, properly, and only once you have decided to proceed.

2. 2

   An adviser calls you

   A licensed New Zealand adviser talks through your situation: who depends on you, what you owe, what you already have in place, and what you are actually worried about.

3. 3

   They compare the market

   The adviser quotes across the major insurers, checks which of them will take your health history on the best terms, and puts the options side by side in writing.

4. 4

   You decide, in your own time

   There is no obligation and no cost to you. If the answer is that you already have enough cover, a good adviser will tell you that.