Life insurance

Life insurance (or 'assurance') is a policy that pays out a lump sum when the policyholder dies. The aim is to prevent the dead person’s partner or family from struggling financially. The “sum assured” is the amount of cover or the amount the policy will pay out when the policyholder dies.

When someone takes out a life insurance policy they will pay a regular premium, usually monthly. How much this is depends on several factors including how much cover they want, how long they want it for, gender, occupation, health and medical history.

Most people only really need life insurance if they are married, in a civil partnership or have children or other responsibilities such as a joint mortgage with someone else. The idea is the payout will support a partner or family financially if the policyholder dies at a time when they are relying on his or her income. It could be used to cover things such as mortgage repayments, replace the deceased person’s salary, or pay childcare or education expenses.

In the past, it was impossible to get life insurance for someone who had tested positive for HIV, as insurers simply deemed the risk of a policyholder dying too high. There was also a lack of data regarding reaction to medication and mortality rates, some of the factors insurers base their premiums on.

This stance by the insurance industry meant not only did people with HIV find it impossible to get life insurance, but people who were at risk of HIV were reluctant to have an HIV test in case it meant they would be turned down for life cover.

In 2005, the Association of British Insurers (ABI) set up the ABI Expert Working Group on HIV and Insurance to tackle these issues. The group, which was composed of clinicians, HIV interest groups and insurers, worked to ensure that the insurance industry treated the subject of HIV risk with sensitivity and fairness. It also looked at HIV statistics and claims data and researched ways that life insurance could be offered to people with HIV.^1,2

Since then treatment and knowledge of HIV has improved and so has the attitude of the insurance industry, albeit slowly.

The introduction of highly active antiretroviral therapy (HAART) over the past few years has prolonged the lives of many people who are living with HIV. Meanwhile insurance companies, underwriters and intermediaries have worked together to design specialist life insurance policies for people who have tested HIV positive.

In the past, it wasn’t just those who were HIV positive who found it difficult to find life cover. Life insurers asked applicants if they were gay and some sent gay men for HIV testing. Regardless of the result, gay men were often charged 'loaded' premiums (i.e. they were more expensive).

Since 2005, there have been significant changes to the way gay men are treated by insurance companies. The ABI HIV and Insurance guidelines removed the so-called “gay questions” from application forms and started to underwrite decisions on sexual behaviour instead of a person’s sexuality.

Further to this, insurers can no longer make assumptions about an applicant’s sexuality from the details of his or her living arrangements, occupation or medical history. Instead, they must assess each applicant on a case-by-case basis, using the best available relevant evidence.

Insurers can now ask applicants, regardless of their sexuality, only a general HIV-risk question, such as: "Within the past five years, have you been exposed to the risk of HIV infection?” Insurers sometimes include examples of increased risk of HIV in their question: “This can be caught through unsafe sex, injecting drug use, or blood transfusions or surgery undertaken outside the EU.”

Almost all insurers ask separately about travel and residence abroad. People who have been in countries where HIV prevalence is over 1% may be considered to be at increased risk of infection.³

It is no longer acceptable to ask if an applicant is gay and insurers will not ask questions about sexuality. Even if an applicant inadvertently discloses such information, it will not be used in assessing their application and gay men will not be asked to take an HIV test.

Applicants will not be penalised by insurers if they have taken an HIV test and do not need to declare negative HIV test results.

In insurance terms 'non-disclosure' is basically lying, intentionally or otherwise, on an application form. Each year, hundreds of insurance claims are turned down for non-disclosure, even if the claim was unrelated to the condition concerned.

For this reason, it is important that all the questions in the application are answered carefully, accurately and to the best of the applicant’s knowledge and belief.

All applications for life insurance, critical illness cover and income protection insurance, will ask if the applicant has tested positive for HIV. If the answer is ‘yes’, the applicant must say so. The wording that appears on application forms is:

“Have you ever tested positive for HIV, hepatitis B or C, or are you awaiting the results of such a test? If the result is negative, the fact of having an HIV test will not, of itself, have any effect on your acceptance terms for insurance.”

If the applicant omits the truth about their HIV status it could result in the policy not paying out when they die and their dependents being left without financial help.

People who have a pre-existing medical condition may find their life insurance premium is “loaded”. This means it’s more expensive than a standard premium to reflect the extra risk to the insurer. And some pre-existing conditions – including HIV – will mean an applicant is rejected by some or most insurance companies.

Essentially, someone living with HIV is still more likely to be turned down for life insurance by mainstream insurers than someone who doesn’t have HIV. Those that are offered cover will pay more than someone without HIV, although roughly the same premium as other pre-existing conditions such as cancer or certain kinds of heart conditions.

The latest research shows that an increasing number of insurers will cover someone with HIV. A survey carried out by financial advisers Unusual Risks in November 2012 found that of the nine largest life assurance companies in the UK, six (66.6%) said they would cover someone with HIV. This was an improvement on 2011 when only 50% of insurers were offering a suitable product.

The life insurers which cover people with HIV are: Prudential, Liverpool Victoria, Bright Grey, Scottish Provident, Zurich and Aviva.

However, the results weren’t as promising for banks. Whilst 40% of banks which sold insurance products questioned are now stating they offer HIV life assurance, very few of their offers are being taken up. Unusual Risks says this is because bank assurers do not offer any indication of terms prior to a client making an application. People living with HIV are being asked to complete applications, submit to medicals and blood tests before any accurate indication of cost is offered by bank assurers.

Of the banks that do offer cover, they appear to be offering the same product as each other. Out of the eight that offered HIV life assurance, seven of them offered the same insurance provider to customers.

Of the banks and insurers that do offer cover, there are certain terms that need to be met. Eligibility will depend on the applicant being on HIV treatment, with an undetectable viral load and a reasonable CD4 count. Another issue is that terms of more than ten years are very hard to obtain. Some policies might also state that applicants need to be hepatitis B and C negative.

The best advice for people with HIV who want to take out life insurance is to speak to a specialist broker or intermediary, such as Unusual Risks, which specialises in working with HIV positive customers and others with pre-existing conditions. Your adviser will be able to talk to you about your options and find the best cover for your needs.

Unusual Risks has several examples of cover the firm has arranged for people with HIV:

A serodiscordant heterosexual couple where the woman (32) had had HIV diagnosed for six years, with a CD4 count of 827 and an undetectable viral load on treatment. They had one child. They were asked to take out life insurance on their new mortgage by their bank but were intimidated by the HIV questions on their application form and asked Unusual Risks to act as intermediaries. They were able to get life insurance with £72,500 covered for £29.86 a month for the woman and £21.32 a month critical illness cover for her husband.

In another serodiscordant heterosexual couple, the man had HIV diagnosed two years ago with a CD4 count of 403 and was on treatment with an undetectable viral load. The couple had a mortgage of £157,000 and two children. They had been turned down by their own brokers. Unusual Risks were able to get quotes ranging from £29.66 a month for £50,000 for ten years to £87.65 a month for the whole £157,000.

Some people will have taken out a life insurance policy at a time before they tested positive for HIV. In this situation, it is not necessary to inform the insurer that their health status has changed and, even if they do, the insurers cannot change the policy nor increase the premiums.

In the event of the policyholder’s death, through HIV, AIDS or any related illness, the life insurance policy would pay out as normal unless the policy specifically says that HIV diagnosis invalidates it.

Anyone who took out a life insurance policy before a positive HIV diagnosis should think very carefully – and seek professional advice – before they cash it in or surrender it. Once someone has been diagnosed with HIV it becomes more difficult, and more expensive, to obtain life cover so if they have an existing policy it’s generally a good idea to hang on to it.