Most peo­ple don’t know what life in­sur­ance is

Townsville Bulletin - - NEWS - AN­THONY KEANE

MIL­LIONS of Aus­tralians with life in­sur­ance are in the dark about how it pro­tects them, new re­search sug­gests.

A study by NobleOak Life found 27 per cent of con­sumers do not know what is cov­ered by their life, to­tal and per­ma­nent dis­abil­ity, in­come pro­tec­tion and trauma poli­cies, with many of them con­fused.

And more than 20 per cent are not con­fi­dent they would be paid if they had to make a claim.

NobleOak CEO An­thony Brown said the find­ings were “very con­cern­ing”.

“The re­al­ity is life in­sur­ance peo­ple can use a lot of jar­gon, and life in­sur­ance is of­ten not well ex­plained over the phone if you buy from in­sur­ers di­rectly,” he said.

“In­sur­ers can be more in­ter­ested in sell­ing you a pol­icy in­stantly than out­lin­ing what you are get­ting cov­ered for.”

Life in­sur­ance doc­u­ments such as prod­uct dis­clo­sure state­ments were of­ten over-tech­ni­cal, Mr Brown said.

There has been crit­i­cism about some cheap poli­cies sold over the phone with very few med­i­cal his­tory de­tails col­lected. In­stead, the un­der­writ­ing hap­pens if a claim is made, re­sult­ing in some claims be­ing re­jected.

Re­ports of re­jected claims by some big com­pa­nies have also af­fected peo­ple’s per­cep­tions.

“We have no­ticed a sharp drop in con­sumer con­fi­dence about claims be­ing paid over the last year, largely as a re­sult of bad pub­lic­ity with re­spect to a cou­ple of the larger in­sur­ers not pay­ing claims quickly – or at all,” Mr Brown said.

Wealth For Life Fi­nan­cial Plan­ning prin­ci­pal Rex Whit­ford said the lack of knowl­edge about life in­sur­ance was not sur­pris­ing, given that most peo­ple did not want to think about death or dis­abil­ity.

He said peo­ple could avoid wor­ries about claims be­ing re­jected by get­ting good ad­vice.

“I have never had a gen­uine claim not paid,” Mr Whit­ford said. “A qual­ity ad­viser will hold your hand and get the job done.”

Mr Whit­ford said some poli­cies were cheap for a rea­son. “The fly- by- nighters are cheap be­cause they are try­ing to cap­ture mar­ket share. And they’re cheap be­cause they never pay,” he said.

Med­i­cal his­tory should be checked when start­ing a pol­icy, not af­ter a claim when it could dra­mat­i­cally in­crease stress. “Who needs that? If you are on your death bed, that would prob­a­bly kick you over the edge,” Mr Whit­ford said.

“You need a strat­egy — a prop­erly crafted plan re­lat­ing to your own per­sonal cir­cum­stances.”

Mr Brown said there were sev­eral in­for­ma­tion sources to find out about life in­sur­ance, such as ASIC’s in­de­pen­dent life­wise. org. au web­site, or pop­u­lar com­par­i­son sites such as Canstar or Fin­der.

He said peo­ple should shop around for the right pol­icy and get quotes from dif­fer­ent in­sur­ers while com­par­ing terms and con­di­tions. NobleOak re­cently launched a guide to life in­sur­ance.

“You need to be wary of ex­clu­sions in some poli­cies, such as pre- ex­ist­ing con­di­tion ex­clu­sions. I sug­gest you ask the in­surer if there are ex­clu­sions you should know about.”

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