For those that hold a personal insurance product, such as life, income protection, trauma or TPD, the benefits of the policy are well known. At Rate Detective, we have had a lot of clients over the years skeptical about whether their claim would be paid. Let’s face it, insurance companies don’t always have the best reputation, so these concerns are understandable.
The aim of this article is to provide some facts around insurance claims. First let us look into how much the life insurance industry paid out in 2013, based on data from The Risk Store (TRS), which in turn based their statistics on data taken from the following insurance companies: AIA Australia, AMP, Asteron/Suncorp, BT, ClearView, CommInsure, OnePath, Macquarie, MetLife, MLC, TAL, and Zurich.
How Much Australian Insurers Paid Out in 2013
According to TRS, Australia’s life insurance industry paid out a total of just over 5 billion against the 85,329 claims made during that year. The bulk of payments went to term life insurance worth more than $2.2 billion to 21,672 claims. This was followed by income protection insurance which paid out over $1.2 billion to 48,389 claimants. Then there was Total and Permanent Disability (TPD) insurance, which paid out over $898 million to 10,756 claimants. Finally, trauma insurance paid out more than $621.792 million to 4,512 claimants.
The Leading Causes of Claims
Based on 2013 statistics, here are the leading causes of claims per type of insurance:
Death: 1) cancer 2) heart disease 3) respiratory disease
TPD: 1) musculoskeletal 2) cancer 3) mental illness
Trauma: 1) cancer 2) heart disease 3) neurological disorders
Income Protection/Business Expenses: 1) musculoskeletal 2) mental illness 3) cancer
TRS noted that two of the three top causes of claims under TPD insurance aren’t covered under trauma insurance. This helped emphasise the importance of taking out more than one type of insurance for a more comprehensive cover. Aside from this, another compelling reason to package two or more types of insurance under the same insurer is that these companies are typically willing to waive certain fees for this kind of arrangement.
When Insurers Might Decline Claims
As you can see a considerable number of claims were paid in 2013, so why all the scepticism about insurance companies?
As we mentioned earlier, more established insurance companies do their best to pay claims quickly and fairly. However, there are cases when they aren’t able to do this. One cause of delay is when the claimant doesn’t provide all the requirements to assess the claim. The insurer will then have to request these requirements, which leads to delays. Because of that, it is important that you know what the requirements are and submit them to the insurance company so that your claim may be assessed quickly. The insurer’s designated representative will be able to assist you with this. If you take a policy through Rate Detective, we have a dedicated claims office to help you through this process.
More than delays, however, a bigger concern among those with life insurance are cases when insurers decline claims. Typically the reason for this is that the event or the situation doesn’t meet the terms and conditions, as well as the definitions outlined in the policy. This is an unfortunate event, which could cause further delays and suffering on the part of the claimant. This can be prevented, however. Before you take out insurance, it is important that you review the Product Disclosure Statement (PDS) of each insurer. The document will provide you with all the essential information you need to know about each company’s products, as well as the terms and conditions, the specific definitions of terms, as well as the fees and charges that may be included in the products. Doing so will prevent potential problems later on, especially when you are about to make a claim.
You may request a copy of the PDS from the insurance company, although it is usually available for download on their website as well. Alternatively, you may download them through our website, by visiting this page.
Another common reason for decline is non-disclosure during the application period. If you provide information in which a reasonably person in these circumstances would consider relevant to an insurers decision to insure you then in most cases you have met your duty of disclosure.
A word of warning! All the companies on Rate Detective’s panel do their underwriting at the time of application. That is, they assess your medical history at the time the application is done and if your medical history changes after you have taken out a policy then it will not affect your insurance. Many direct insurance providers that you sometimes seen advertised on TV do their medical assessment at the time of claim. Generally speaking, the possibly of a decline is higher with these providers as not all information was accessed at the time of application.
Choosing a Suitable Insurer
While major insurers provide the same types of insurance, such as term life, income protection, trauma, and TPD, there will be significant differences in their respective products. And while reviewing their PDSes will help you choose which insurer is most suited to your needs, it can be a confusing and time-consuming process because you’ll have many options to choose from. Thus, it helps to work with a comparison site, like Rate Detective, to help you through the process. They can even assist you during the application process, and even the claims process, which could help unload a lot of stress and anxiety on your part during what is often a trying time in your life.