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ISI releases policy replacement guidelines

The Investment Savings and Insurance Association (ISI) has released improved guidelines to assist consumers who are considering replacing an existing life insurance policy.

Friday, April 23rd 2010, 1:22PM 4 Comments

by Jenha White

ISI chief executive Vance Arkinstall says sadly there are cases where existing policies have been replaced and several years down the track when a claim arises it is found that the new policy doesn't provide the cover expected.

"In a number of these cases if the original policy had continued the claim would have been settled without question."

He says for example changes in health, leisure activities or occupation may affect your insurability with a new provider. A different policy may offer a lower premium but may not provide the same coverage. The new policy may have new benefits but might also not cover some risks the existing policy covered.

"When considering a replacement it is essential that professional advice is obtained before making a decision," he says.

The new guidelines aim to provide increased transparency and disclosure so that life insurance policy owners who are considering replacing an existing policy with a new policy make an informed decision for the right reasons.

The new guidelines include a brochure to assist consumers to understand the advantages and the risks associated with replacements and to assist consumers in understanding the questions they should ask their adviser.

There is also Replacement Policy - Customer Protection advice designed to assist the customer to understand the information they need to consider before making an informed decision.

 

Jenha is a TPL staff reporter. jenha@tarawera.co.nz

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Comments from our readers

On 27 April 2010 at 9:05 am Bazza said:
I wonder how many customers claims have been paid because an old policy with inferior wordings or definitions has been replaced by a newer policy with better definitions that cover events that weren't previously covered. I bet the clients in those circumstances were happy that the old policy was replaced.
On 27 April 2010 at 3:19 pm Brian Klee said:
As a major contrast to customers getting better policy wordings are the tragic circumstances of perfectly good policies that have been replaced without a thorough check of the applicant's medical history. On several occasions I have tried to assist claimants whose policies have been recklessly replaced with inadequate disclosure and pre-existing conditions surfacing at claim time. The day you have a claim denied because you have replaced a perfectly good insurance policy is your worst nightmare, especially when you have to front up to the widow. I have often stated that you are assessed as a professional as your clients claims are paid, not when giving advice.
On 4 May 2010 at 5:20 pm Darcy Sollitt said:
So what Vance is saying is that the ISI originally introduced the concept of Policy Replacement and the ISI stuffed up and are now trying to look good by introducing new guidelines....What a joke
On 23 November 2011 at 2:24 pm Help said:
Where can i find the details around Replacement Policy - Customer Protection advice and where do i find the actual standard?
Commenting is closed

 

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