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Making a claim is an important process that both policyholders and beneficiaries of a life insurance policy should understand. Whether you are about to make a claim or are making sure that your next of kin is familiar with the claims process, here are some simple steps to remember.
Note: If your claim is for an ongoing income protection payment, may need to maintain your policy by updating your insurer with your health status.
Making a claim on a life insurance policy is not necessarily a complicated procedure but it can be time consuming if the appropriate steps are not taken. Bear in mind that the claims procedure may differ from one provider to the other. However, you can manage this process more efficiently by taking some key considerations into account when making a life insurance claim. These include:
ASIC tracks the claims related disputes performance for Australian insurers. The tables below show claims and related dispute information for death cover bought directly from insurers, through advisers and through a superannuation fund between 1 January 2018 and 31 December 2018.
Insurer | Claims accepted rate | Average claim time (months) | Disputes per 100,000 lives insured | Policy cancellation rate |
---|---|---|---|---|
AIA | * | * | * | 21.00% |
AMP | * | * | * | 17.50% |
Allianz | * | * | * | 13.10% |
ClearView | 97.70% | 2.4 | 3.8 | 16.60% |
CommInsure | 93.30% | 4.1 | 22.2 | 14.20% |
HCF | * | * | * | 12.70% |
Hallmark | * | * | * | 32.10% |
Hannover Re | 89.70% | 1.1 | 8.3 | 10.70% |
Industry Average | 88.00% | 3.3 | 15.7 | 15.20% |
MLC | * | * | * | 16.00% |
MetLife | * | * | * | 14.20% |
NobleOak | * | * | * | 9.60% |
OnePath | 94.50% | 5.4 | 66.6 | 18.00% |
St Andrews | 85.50% | 2.3 | 0 | 22.60% |
Suncorp/Asteron | 88.00% | 3.6 | 29.4 | 17.20% |
Swiss Re | 90.90% | 3.1 | 1.5 | 9.30% |
TAL | 72.80% | 3.1 | 18.9 | 24.50% |
Westpac | 94.60% | 3.1 | 8.3 | 13.30% |
Zurich | 94.30% | 2.4 | 14.1 | 16.60% |
*The number of finalised claims is too small to provide a reliable result.
Insurer | Claims accepted rate | Average claim time (months) | Disputes per 100,000 lives insured | Policy cancellation rate |
---|---|---|---|---|
AIA | 97.40% | 2.3 | 9.4 | 15.20% |
AMP | 97.50% | 5.4 | 7 | 17.00% |
ClearView | * | * | * | 15.20% |
CommInsure | 88.50% | 2.1 | 11.5 | 14.80% |
Hallmark | * | * | * | 19.40% |
Industry Average | 96.30% | 3.1 | 7 | 16.00% |
MLC | 97.90% | 2.4 | 6 | 18.00% |
MetLife | * | * | * | 25.60% |
NobleOak | * | * | * | 4.70% |
OnePath | 96.50% | 4.3 | 5.6 | 16.70% |
QBE/Integrity | * | * | * | 0.00% |
Suncorp/Asteron | 97.20% | 1.9 | 8.8 | 15.10% |
TAL | 98.40% | 0.9 | 9.2 | 13.50% |
Westpac | 95.00% | 2.2 | 2.6 | 15.20% |
Zurich | 96.30% | 1.4 | 5.8 | 14.30% |
* The number of finalised claims is too small to provide a reliable result.
Insurer | Claims accepted rate | Average claim time (months) | Disputes per 100,000 lives insured |
---|---|---|---|
AIA | 98.50% | 0.8 | 1 |
AMP | 99.90% | 8.4 | 0.4 |
CommInsure | 96.50% | 1.3 | 0.8 |
Hannover Re | 97.60% | 0.9 | 1.1 |
Industry Average | 98.20% | 1.3 | 0.8 |
MLC | 99.10% | 0.7 | 0.4 |
MetLife | 99.60% | 0.8 | 0.4 |
OnePath | 97.10% | 1.2 | 1.6 |
QInsure | 93.50% | 1.7 | 1.5 |
Suncorp/Asteron | 94.00% | 1 | 0 |
TAL | 98.50% | 0.8 | 0.7 |
Westpac | 98.40% | 1.6 | 0.5 |
Note: The policy cancellation rate is not shown for the superannuation fund sales channel as changes are mainly due to superannuation trustees changing the insurer of the fund.
It's crucial to familiarise yourself with the steps that you should take in the event of insurance disputes, as this will enable you to act more decisively and use your time wisely on the proper course of action in the event that you have a dispute that needs to be addressed. In the event of a complaint or dispute you should look at taking the following steps:
A common cause of life insurance disputes revolves around pre-existing medical conditions. Each year, the AFCA is contacted by hundreds of cases of people following their income protection claim being rejected. The life insurance company has usually rejected the claim due to the policyholder not letting them know about a pre-existing medical condition related to their claim. These cases highlight the sheer importance of disclosing all known information to insurers before signing the contract of insurance. Many applicants will withhold details of pre-existing conditions or lifestyle habit in an attempt to save on their policy premiums. As part of the insureds duty of disclosure, it is their responsibility to state all known information regarding pre-existing medical conditions to their insurer to avoid this situation occurring.
A pre-existing medical condition is commonly recognised as any condition:
Under the insurance contract act of 1984, each applicant is required to state every matter that they know, or would be expected to know that is relevant to the insureds decision to provide cover and at what rate. Each applicant will be required to answer questions during the application regarding their health, occupation and lifestyle. It is safer to contact your insurer to discuss any matter that you are unsure about disclosing during the policy application to avoid any surprises at claim time.
It is important to remember that life insurance benefit payout is not taxable at the time of a claim, if the nominated beneficiaries are financially dependent on you. These generally include:
If you have nominated specific individuals as the benefactor of your life insurance policy and they are not financially dependent on you, there may be some tax implications.
At a time of grief the last thing that most people want to be doing is getting stressed about making a life insurance claim. At the same time, for many people this is a necessity that needs to be sorted out as quickly as possible to avoid financial hardship in the short-term.
Being prepared can save a lot of time when it comes to making a claim on a life insurance policy. This preparation can mean everything from going through the claim procedure with the policyholder when the policy is first taken out to ensuring that you always know where you keep the policy documents in case you ever need to get hold of them and the policyholder is no longer around. Simple things like these can help you to save time and hassle when it comes to actually making a claim on a life insurance policy making it easier to cope with the loss of a loved one.
An adviser can help you find cover from trusted life insurance brands.
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