The one question at the back of everybody’s mind when they are taking out insurance is: I wonder if they will pay me when it comes to time to make a claim? It’s a reasonable question to ask. In fact, it’s probably the most important question to ask of your insurance company.
Like everyone, I’ve heard stories about people not getting paid by their insurance company. But as someone who deals with insurance every day, I can honestly say however, that not getting paid is the exception, not the rule. Unfortunately, most of us are subjected every day to the “News”, which in my experience tends to dwell more on the bad part of the news. We see the story of the one person who died in the car crash, but there’s no mention of the millions who made it home safely that night. Because, well, as they say, it’s just not “news”.
So whenever there’s a natural disaster, you tend to see stories about a few people upset about the insurance company not paying them for some such thing or another. What they don’t tend to mention are the thousands of people who did get paid their claims. And they often don’t explain WHY the insurer won’t pay the few they aren’t willing to pay.
When it comes to personal risk insurance (Life, TPD, Trauma, and Income Protection), the biggest reason for people not getting paid is a thing called “non-disclosure”. That is the person hasn’t told the insurance company everything they have a reasonable right to know about that person’s health or lifestyle. When you’re applying for a personal insurance policy, you’re asking an insurance company to look at your personal situation and decide whether or not they’re willing to take on the risk of having to pay you should a claim arise. (Ask yourself if you were an insurance company would you want to insure the life of someone who regularly engages in risky behaviour like jumping out of aeroplanes for example?)
You might have noticed that during the process of filling out the application the insurance company tends to ask a lot of questions. The reason they do this, is so that once you’re accepted, you have the confidence of knowing that they fully understand your situation, and from that point forward, they are happy to cover you for life’s risks.
The good news is that non-disclosure is easy enough to avoid. Normally, your financial advisor will walk you through any written application to ensure you’ve completed them correctly. A lot of the insurance companies even have a telephone based underwriting service where a professional data collector will call you to collect your health history over the phone so that you don’t have to tell all your personal health history to somebody face to face, as it can sometimes get a bit personal.
At the end of the day, though, disclosing the truth about your health means that you can avoid the risk of not getting paid when you think you should. Even if you’re not sure whether you can get the insurance cover you’re after, there might be other options that will cover you, such as accident only cover, or certain group policies, etc. There’s almost always an option. Do some research or find an advisor to find you the right cover and avoid any surprises at claim time.
If you’ve had trouble getting insurance before or have a question about your eligibility of cover in certain situations, please don’t hesitate to contact me at firstname.lastname@example.org