Published 24 Oct 2018
Income protection is a form of insurance that pays out when you are unable to work due to sickness or injury. These products usually provide up to 75 per cent of your gross wages over a specified time period, by which time you should hopefully have recovered enough to return to your job.
The rejection rates for income protection insurance claims are among the lowest for life insurance cover, with only 7 per cent of claims turned down, according to Australian Securities and Investments Commission data.
Nevertheless, a rejected claim can be financially devastating for households that have paid premiums in good faith, only to be let down when they need help the most. That's why we've compiled five tips to maximise your chances of receiving income protection.
1. Always disclose your full medical history
One of the most common reasons that insurers use for turning down a claim is that a policyholder failed to disclose pre-existing medical conditions. You must always be as honest and detailed as possible about your health when purchasing insurance, regardless of how minor a problem may seem.
2. Obtain income protection through a broker
Insurers are keen to secure your business, so they may not always have your best interests at heart. An independent broker can provide impartial advice and talk you through available options, as well as search for a tailored income protection policy ideal for your circumstances.
3. Ask your insurer about policy exclusions
Every income protection policy contains exclusions that could prevent you from successfully claiming against your insurance if you are injured or become sick in certain circumstances. You must clarify what these exclusions are before signing on the dotted line, as some cost-effective policies may have significant limitations.
4. Read the terms and conditions closely
Exclusions aren't the only small print you need to consider. Income protection policies are several pages long, but you'll need to read them thoroughly to ensure you are getting the coverage you and your family require. Don't be afraid to phone the insurer directly to ask them questions about sections of the policy that are unclear.
5. Contact an income protection claims lawyer
An insurer may still reject your claim even if you follow all the steps in this article. The recent Financial Services Royal Commission revealed numerous instances of misconduct in the life insurance industry, which means legitimate claims are often turned down.
Contact an income protection claims expert at Gerard Malouf & Partners Superannuation Lawyers today to see whether you can dispute an unfair decision.