How to effectively process your life insurance claim

It is emotionally and financially stressful when a family member passes away, similarly stressful is being told that you can no longer work due to an illness or injury. These life events are challenging enough on their own, but now you must undergo the complex process of lodging an income protection, disablement, critical illness or life insurance claim to receive some financial relief.

Risk Adviser recently invited our CEO, Russell Cain, who also heads up our specialist claims team, to share his thoughts on navigating the complexities of processing a claim for the first time.

The Risk Adviser podcast is a resource for professionals operating in the Australian life insurance industry. Sharing their advice on the latest issues impacting the sector and its consumers.

Russell takes us through the life insurance claims process and the benefits of using a claims specialist who works within the industry as opposed to a lawyer who can often charge you far more than is required.

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Life insurance claims

Life insurance claims are usually paid as a lump sum or monthly benefit, depending on the type of product you have. After the claim forms have been completed, returned and evidence reviewed the claim is either accepted or declined based on a variety of factors. If accepted the benefits are paid to the beneficiary(s) of the policy.

Every claim is unique, but regardless of the circumstances, the timely assessment of your claim remains crucial to the long-term quality of your life. “Claimants priorities should be placed first”, says Russell. “Delaying the financial relief or benefit that will help a person cope with the life-altering event, is almost as bad as not having any insurance at all.”

Many times insurers delay claims in an attempt to discourage clients from completing the claims process, as was revealed in the recent 498 report by ASIC. Ambiguous and confusing policy terms and clauses can lead to a lengthy claims process and or poor claims assessment outcomes.

What often happens is, the financial impact has already hit while you’re still waiting for your claim to be assessed. You may have had to sell your house and move to a more affordable place, perhaps even move in with family; because the financial strain of your illness or injury has bled you dry.

Insurance jargon can be challenging at the best of times, but when you’re stressed and upset, it can be downright impossible to interpret. For example, when lodging an income protection claim, you might find it difficult to understand what an ‘important income producing duty’ is. A claim specialist working on your behalf can help clarify and explain these terms simply and without prejudice.

To help you in effectively submitting future claims, Russell provides insight into the inner workings of the life insurance claims process.

How long does a life insurance claim take?

Now we’re getting to the nitty-gritty of the matter. How long the claims process takes is largely dependent on the level of assistance you receive, and the evidence you provide.

Some insurers only offer a Triage process, wherein various individuals are assessing different sections of your claim. This could delay you receiving your claim payout because you might have to repeat yourself several times. Other insurers have dedicated consultant. “A dedicated claims consultant understands your claim and the status. Even though they might not be a specialist in every part of the claims process, a dedicated claims officer generally adds more value than a triage process would”.

Either way, you don’t have a choice which option the insurer uses. However, you do have a choice to go “Solo” or have an external team work with you. The external team would become your central contact, be there to help you understand the process, your obligations, inform you when the insurers are overstepping their mark and generally makes the claims process a lot less stressful.

Russell encourages you to work with an industry claims team that will act as your dedicated central contact, so you can avoid dealing with multiple consultants, be guided through the process and can avoid being tripped up by the insurer.

Benefits of using a life insurance claims specialist

  • They have extensive experience and can explain insurance terminology, providing you with clarity and certainty.
  • A specialist claims consultant working for you is dedicated to getting you and your family every dollar owed to you.
  • Using a life insurance claims specialist from within the industry that has expertise in claims handling is a fraction of the cost than going to a solicitor or lawyer who generally charges huge amounts of money which eat away any potential benefits payable.
  • They understand your needs, as well as the obligations you have toward the insurance company.
  • They know your rights and will let you know when an insurer is taking advantage of you or stepping over the line.
  • A claims specialist enables you to focus on your recovery and your family, while they focus on your claim.

Life insurance claims process | Doing it solo vs. working with a claims team

number-1Notify your insurer of your claim as soon as possible after the event has happened, either in writing or via telephone.

Be aware, this call will be recorded, and they will try to get you to answer a series of questions in relation to your claim. – Do not respond to any of these questions. Just ask for the forms and make it clear that you will answer the requested information as per the claims forms.

A consultant will explain the claims process and provide you with the necessary forms and information required to process your claims.

Be aware that when calling the claims department all calls are recorded. The answers you provide could have an impact on your claim being approved. When lodging a claim for the first time, people are often in a complete state of shock and stress. They don’t necessarily understand why the insurer is asking certain questions and might interpret them incorrectly.

It’s important you carefully consider what you’re going to say before you provide an answer.

Russell explains that many companies ask the same question at different periods of time, only with slight variations. Often the consumer does not understand the reason for the question or that the question is being asked again, only phrased differently.

When you’ve experienced trauma, illness or injury, it’s often difficult to accurately articulate what happened. That’s why talking to a specialist is so important, because they understand why these questions are being asked and what information you are obliged to answer and what you are not.

number-2Complete the claim forms and any requested documentation.

Depending on the type of claim, the following documentation might be required:

  • Valid death certificate and or medical reports from your doctor or specialist.
  • Medical test results (Depending on the type of condition / cover being claimed on)
  • Police report in the event of an accident.
  • Certified copy of your identification and proof of age.
  • Your original policy
  • Proof of income, as part of your income protection claims process.

number-3Submit the completed forms and requested documentation.

It’s important that you know and understands your product disclosure statement (PDS) and policy documents (issued to you when the policy was accepted) and your latest policy renewal notice when filling in these forms. Focus on the relevant sections and then highlight these in your claim form.

Your PDS might have certain offerings and benefits available to you, but the claim form might not take these into consideration. For example, with Income protection, some insurers offer that your benefit amount is based on the best three consecutive years salary. However, the claim form might only request proof of salary for the last 12 months before your injury or illness.

Russell warns that if it’s not brought the assessors attention your claim might fall short. Specified injury benefits also get missed quite often, even though claim assessors should really be looking at how they can pay you the maximum benefit. This can mean the difference between a few thousand and a 10 of thousands of dollars in benefits.

Your most recent policy renewal notice and original policy documents are just as important to ensure you get paid your entitled benefits, especially if you’ve recently received an upgrade, increases in sums insured through CPI increases.

number-4Your claim gets reviewed and considered for approval based on the information you provide.

Remember it is the claimant’s responsibility to provide all the evidence showing that they meet the definition under the policy terms. Also, see duty of disclosure below.

number-5Your claim gets denied or approved.

Possible reasons for your claim being denied include:

  • Non-disclosure: Important information was left out, or inaccurate information was provided when you applied for the policy.
  • The cause of death, disability or inability to work is not covered by your policy.
  • Claiming for pre-existing medical conditions that you may have suffered before taking out your life insurance policy.
  • There was a specific exclusion on your policy for the relevant condition you want to make a claim on.
  • You do not meet the definition of a claimable event as per the policy wording.

Understanding and completing the claims process effectively and promptly can be a stressful and frustrating process. Specialists that deal with claims on a daily basis can provide you with expert advice and assistance throughout the entire process.

number-1Call your claims teams.

They will take you through the process and explain everything in detail. After that, they will contact your insurer and organise for the claim forms to be sent to you and them.

number-2The team will help you complete the claim forms while advising you about the various documents you need to provide.

number-3Return the claim forms and relevant documents to the team.

The team will then check that all the forms have been correctly filled in and all required documentation is accounted for. The team will then send your forms to your life insurance company.

number-4The insurance company will assess your claim.

Your team will continue to monitor and liase with the insurer while your claim is being assessed and keep you up to date.

Questioning the duty of disclosure

One of the key steps in a claims process is to assess if you’ve fully and accurately disclosed your medical history up until the start of your policy. One way many insurers do this is by accessing your personal Medicare and pharmaceutical benefits scheme data to ensure you were transparent and truthful when you applied for the policy.

Unfortunately, it has come to light that many insurers try to get you to disclose your Medicare & PBS data post policy inception in an attempt to get more information about your medical history. We have seen them inappropriately try to use this information to deny people’s claims.

An insurance company dealing with your claim should only take into account your medical history up until the inception date of your policy.

Of course, further investigation is required in the event of a client requesting a backdated claim. For example, they’ve already been off work for 12 months due to an illness of injury. It is then reasonable to expect the insurer to use the Medicare search data to corroborate and validate the claimant’s request for a back-dated claim and that they have in fact been under the regular care of a medical practitioner.

We understand how scary making a claim can be, especially once you’ve received all the forms that need filling out. We would like to offer you our Claims Assistant Service which gives you access to our specialist claims team and provide you step-by-step guidance throughout your claims process.

Our claims team is here to help you navigate the process and ensure a fair claim result is provided.

Author: Russell Cain
Published: May 5, 2017

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