When it comes to insurance, we’ve all heard those ‘horror’ stories of claims not being paid, leaving the beneficiary in the lurch at an already difficult time. It’s a ubiquitous concern and a question our advisers are frequently asked. So, we put the question to Apt Wealth Risk Specialist Adam Spilsted.
Adam Spilsted: The short and simple answer is that insurers will pay on every single genuine claim. If the insured provided the insurer with all relevant information during the application/underwriting process and the injury or illness meets the definition relevant to their policy, the insurer has a contract to pay.
The key word, which can get people into difficulty, is ‘genuine.’ You have an accident that genuinely stops you from working, so it seems like a straightforward and, indeed, legitimate claim.
However, it’s not just whether your accident is genuine that can affect claim legitimacy. Other than authenticity, an insurer will consider two other key areas.
Your Medical History
At the time of application, you have a “duty of disclosure”, meaning you must provide all relevant information to the insurer. If you had a known health issue when you took out the policy but withheld that information from the insurer, it could render your policy void.
For example, if you made a claim for Total Permanent Disability (TPD) and had a previous back injury that you didn’t disclose, it’s unlikely you’ll get paid.
Meeting the Policy Definition
Secondly, and a little more nuanced, is whether you meet the definitions of the policy. And this is more about you, as the insured party, understanding what your cover includes. Now, this can be a complex area. Generally, this information is found in the Product Disclosure Statement (PDS) and is often written in very technical language.
And there are some crucial distinctions. For example, income protection policies issued after 1 October 2021 significantly changed the definitions of ability to work.
Some policies issued before this date will pay ongoing income payments if you cannot return to your ‘usual profession’. Newer policies generally stipulate a time when payment will cease if you can return to ‘any profession.’ In other words, ongoing payment relies on you not being able to work in any capacity, in any job, which may be quite different to being unable to work in your particular profession.
Insurance should give you peace of mind. And understanding the requirements and definitions in the PDS is critical to knowing you have the right cover. And that’s where your financial planner or risk specialist comes in.
Anyone can go online, find a policy and take it out in minutes, but if it’s not the right cover, you may find yourself in a tricky situation if you ever need to claim.
Working with an adviser or risk specialist will ensure you have the best cover possible. We will listen to your needs, identify the right cover, ensure you understand disclosure requirements and explain what you are covered for in simple terms.
And that’s where your peace of mind comes in.
At the end of the day, it’s a misconception that insurers ‘don’t pay.’ Every genuine claim will be paid. The key is to fully disclose everything relevant to your policy and set yourself up with the right cover from the outset.
General Advice warning
The information provided in this blog does not constitute ﬁnancial product advice. The information is of a general nature only and does not take into account your individual objectives, ﬁnancial situation or needs. It should not be used, relied upon, or treated as a substitute for speciﬁc professional advice. Apt Wealth Partners (AFSL and ACL 436121 ABN 49 159 583 847) and Apt Wealth Home Loans (powered by Smartline ACL 385325) recommends that you obtain professional advice before making any decision in relation to your particular requirements or circumstances.