Navigating the Assisted Dying Bill: Life Insurance in a New Era
As the UK approaches a significant shift in its approach to end-of-life care, the life insurance industry is preparing to adapt. Eleos, a fully digital life insurance provider, analyzes the implications of this upcoming change.
On November 29, 2024, the Assisted Dying Bill progressed through its second reading in the House of Commons, receiving considerable support. It is expected to move through additional stages before becoming law, with a potential implementation date around early 2028. The bill, applicable to residents of England and Wales, would grant individuals with specific criteria the right to seek assistance in ending their lives. Individuals must be at least 18 years old, terminally ill with a prognosis of six months or less, possess full mental capacity, and have demonstrated a clear, voluntary, and informed decision.
The process involves evaluations from two independent physicians, approval from the High Court, a reflection period, and self-administration of a prescribed lethal drug. This new legal landscape presents several challenges for insurance providers, particularly concerning how existing policies and practices will align with the legislation.
Key Challenges for Insurers
Insurers must address several crucial issues to navigate the legal and regulatory environment:
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Current Treatment of Suicide: Most life insurance policies in the UK exclude suicide claims within the first 12-24 months. The industry may need guidance on handling assisted death.
- Leading reinsurer SCOR suggests treating assisted dying similar to suicide concerning payout periods. Some insurers may opt for this model, whereas, in Canada, assisted dying aligns differently with insurance payouts.
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Terminal Illness Benefits: Contracts that specify terminal illness usually define it as a life expectancy of 12 months or less. This definition conflicts with the six-month timeframe defined in the bill which could require policy adjustments.
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Claims Processing: Thorough investigations will be needed for assisted deaths to investigate criteria adherence, likely delaying payouts.
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Underwriting and Premiums: The introduction of the bill may require insurers to reassess risk models and change premium calculations.
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Terms and Exclusions: Significant changes could mandate insurers to revise policy key terms.
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Forfeiture: The forfeiture rule, preventing inheritance for those involved in the insured’s death, can raise complications. Since any form of involvement in helping someone die might be seen as coercion, even if there has been High Court approval, particularly if insurance policy terms were updated recently, this adds layers of complexity.
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Trusts: Life insurance policies held in trust require trustees to conduct inquiries into the insured’s death, which may lead to complex, time-intensive processing and delayed payouts.
Preparing for Implementation
With less than three years until the potential enactment of the bill, insurers need to act promptly. Collaboration within the industry is crucial for uniformity, potentially setting industry standards and new policy terms. Maintaining consistent practices across the industry could help prevent uncertainty, protect consumers, and encourage cooperation. Policyholders also will likely need to seek professional advice to understand any potential changes in their insurance coverage.
Eleos CEO Kiruba Shankar Eswaran commented, “History demonstrates that even well-crafted legislation can have unintended consequences. The more preparation the industry undertakes, the better equipped it will be to respect individual choices while safeguarding the integrity of life insurance policies and preventing abuse. It is a responsibility we at Eleos do not take lightly.”
