When insurers won’t pay up GOLDEN RULES
Insurance is supposed to be there when you most need it.
It should pay off the mortgage should you die, cover the bills if you fall critically ill, or pay for daily nursing should you become permanently disabled.
And yet, each policy is filled with ‘‘exclusions’’ and ‘‘restrictions’’ on when claims will, and will not be paid.
Don’t get me wrong. I love insurance. My dad, who took his insurance seriously, died young, so I know the value to a family.
But you have to approach insurers with your eyes wide open, and that means reading the policies you buy to ensure you know what you are covered for, and the times when insurers will decline your claim.
Reading your policies is the only cure for the magical thinking that many people bring to insurance, which pretty much amounts to this: If something bad happens, the insurer will pay.
Well, this top 10 should reveal that that is not always true. ❚ Know, don’t guess ❚ Read your policies ❚ Send in your medical notes
‘‘Insurers prefer you not to do things with a high chance of death or injury.’’
1. Your errors: The insurer wants to know everything about the risk it is taking on, often including the minute details of your health history. Best to attach a full copy of your medical notes to any life/trauma/disability/ health/critical illness policy application, to prevent your insurer tearing up your policy for ‘‘non-disclosure’’ at claims time.
2. You die, or are hurt, while committing a crime: You do not always need to have been charged for an insurer to consider you were committing a crime. Sometimes, your crime has to be ‘‘materially’’ illegal. Keep those speed and blood-alcohol levels down while driving.
3. You were reckless: Some policies, such as travel insurance, require a level of common sense. Reckless behaviour, like a selfguided trip around a Manila slum, may not be viewed very favourably at claims time.
4. Getting caught in a riot: Insurers prefer you not to do things with a high chance of death or injury. Rioting is one, as is heading off to war, or getting blown up by a terrorist. And yet, some of the wording on some life insurance policies is very broad. Just being caught in a riot, without being an instigator, can be enough.
5. Illegal drugs: Should you die, or be hurt using them, your family may find they struggle to get your insurer to pay up.
6. Being drunk: Should you become permanently disabled after falling from a tree you were climbing drunk at a stag party, your disability insurance may not pay up.
7. HIV or sexually transmitted diseases: Sometimes this is a blanket exclusion, which feels like a hangover from the Aids panic of the 1980s and 1990s.
8. Redundancy: If you are made redundant in the first three months after taking out redundancy cover, there will be no payout. It can be hard to spot such exclusions.
9. Not hurt enough: Losing an eye may sound like a permanent disability, but you have to lose both to be covered by some disability policies.
10. Not ill enough: Your heart attack may turn out not to be serious enough to trigger a trauma insurance claim, or your cancer not nasty enough.
Read your policy. Seek to understand it. And never, never, take an initial ‘‘no’’ at claims time as final.