I’m looking to shed some light on insurance claims and hopefully shatter some illusions that insurance companies never pay claims. We’ve all heard at least one horror story about an insurance company not paying a claim. The most recent you may recall is the CommInsure scandal as reported by Four Corners in March this year. The story reported that claimants had suffered a trauma event, illness or injury and somehow did not meet the required definition to receive payment.
A recent independent study, across the main 13 insurance companies in 2015, shows they paid almost 90,000 claims totalling $6.9 billion. These figures are up from 75,000 claims, totalling $4.9 billion in 2014. This is a staggering increase in just one year, and it has been consistently rising in recent times.
Additionally, the insurance Big 5 stood up to their devastating reputation yet again in 2015 as leading causes for claims across all types of life insurance. The Big 5 include: cancer, heart disease, mental health (e.g. stress, depression, anxiety), musculoskeletal (e.g. Osteoporosis, broken bones, torn ligaments) and neurological (e.g. Alzheimer’s disease, Multiple Sclerosis, dementia).
This year alone I have assisted with six new claims and one ongoing claim. That’s one per month on average. Six of these claims fell into the Big 5 category. It’s so gratifying to know that these clients and their families are covered should the unexpected occur and their insurers have fulfilled their promises by paying the claims.
Something to contemplate when considering your own situation, how many of those 90,000 claimants do you think expected to claim? How do you think their dependants would have fared if they didn’t receive the claim proceeds? How will your dependants fare if you’re not insured?
To make sure you don’t become the next horror story, be sure to follow these three tips:
- Don’t give insurance companies a reason to not pay a claim – be truthful on your application form and disclose all pre-existing conditions.
- Consider taking out a level premium option – this means your premium will be the same price year-to-year, only increasing with CPI. By doing so, you will be able to hold the policy longer when your risk of claiming increases.
- Speak to an adviser – in most cases where an insurance company has not paid a claim the claimant has not had an adviser. An adviser will be able to assist you in making the right choices when considering life insurance.
If you or anyone you know have any questions regarding their own situation and are considering taking out or making changes to life insurance, please let us know. It would be unfortunate to see you make the same mistakes other have made before you.
Please note: The information provided in this article is general advice only. It has been prepared without taking into account any person’s individual objectives, financial situation or needs. Before acting on anything in this article you should consider its appropriateness to you, having regard to your objectives, financial situation and needs.