Claims – the case for applying

Many policyholders don't make claims on their life insurance, when they should do Russell Hutchinson says. He reckons, even if in doubt, make a claim and let the company decide.

Tuesday, April 10th 2018, 6:00AM 1 Comment

by Russell Hutchinson

Good Returns, last week, reported on a settlement between an adviser and a client where $30,000 was paid because the client was unhappy with the advice they received. The dispute resolution services FSCL was involved in helping to bring the negotiated settlement about. It underlined one of the less well-known sources of claim failure – where you qualify, but you didn’t claim.

I have some sympathy for both parties in the claim story (click here to read the background). The bare facts seem to be a misunderstanding: the client had a brain tumor, and called their adviser. The adviser thought it was a problem relating to a pre-existing hearing issue because the client did not describe it as a brain tumor - and so said that a claim could not be made.

It was something like two years later before the condition worsened and a trauma claim of $238,000 was paid – a decent sum, compared to most trauma policies, and still a good insurance outcome, so the adviser is to be congratulated on that.

Yet the client still made a complaint based on the fact that they had waited years for a claim they could have made earlier, and that the adviser could have helped to remove the hearing exclusion earlier. They negotiated a settlement of $30,000 under the aegis of FSCL.

We lack the detail necessary to make any firm judgments about the case or the processes used by the people involved. However, some general thoughts on handling inquiries of this type do arise.

Saying 'that won't be a claim' is a big call. Medical advice is probably needed, but at the end of the day, it’s the insurer that makes the decision - so why not let them? The phrase 'we are not doctors' comes to mind.

Good process therefore, would be to fill in a claim form. Having said that, managing expectations is vital, and some good sense boundaries apply. No one wants the client trying to claim for ingrown toenails, thinking that they are about to get a million dollars. Something along the lines of ‘I seriously doubt that will be claimable, but my process is to let the insurer decide, we can complete a form and set the process in motion’ may be in order sometimes.

How many such ‘undiscovered’ claims are out there?

Quite a few.

Individual people that hold insurance contracts are often scared to make a claim. Think of people that won’t send back the wrong dish in a restaurant – that is who we are talking about. They are relying on advisers like you to help them out, to help them be brave. I often ask advisers in workshops about discovered claims – and routinely they find them.

I have heard stories about skin cancers, brain injuries, jobs lost because of illness, and more. The advisers that tell me those stories always ask, in every review, whether it is a call or a meeting ‘have you had any health issues since I last saw you?’

Tags: health insurance Insurance Advisers