What is life and disability insurance?

​

Just as you can insure your car or your home, you can also insure your health.

​

Life insurance is a product where you pay regular payments (premiums) to an insurer and, in return, the insurer agrees to pay a sum of money (a benefit) upon your death. 

​

Some life insurers offer related products which allow you to claim a benefit if you suffer a terminal illness, or if you suffer a specified medical event (trauma insurance). You may nominate anyone to receive the benefit (be a beneficiary under the policy). 

​

Similarly, disability insurance is a product where you pay premiums and in return the insurer agrees to pay a benefit, or benefits, if you are unable to work because of illness or injury. There are different types of disability insurance: for example, income protection insurance can provide benefits every month or so if you are unable to work in your usual role, while total and permanent disability insurance can provide a lump sum benefit if you are unlikely ever to return to work in your usual role or a role within your education, training, or experience. The definition of 'disabled' will depend on the terms of the specific disability insurance policy.

​

The terms of any life or disability insurance - including but not limited to as to whether any events are excluded or whether there is a specified end date for cover - will be set out in the individual insurance policy.

Life and disability insurance can be obtained directly from an insurer, or through aninsurance broker, or through your superannuation fund account. If you obtain life insurance through superannuation, your premiums are paid from your superannuation fund account balance (instead of your bank account).

​

​Applying for Life and Disability Insurance

 

Life insurers will ask questions when you apply for or change your life or disability insurance cover. These questions may ask you about:

​

• (a) your age, 

• (b) your job, 

• (c) your medical history, 

• (d) your family medical history, and 

• (e) your lifestyle. 

​

Life insurers may also require you to be medically examined. Life insurers rely on your answers to their questions, and any medical examination, to assess your application and to decide the terms of the insurance which they are prepared to offer (and the premium which they will charge for the insurance cover).

​

You should take care to answer the questions asked in the life insurer's application truthfully and completely. If a life insurer learns that an answer in the application is incorrect, the life insurer may be entitled to change the terms of the life or disability insurance contract they issued to you (such as the benefit payable) or even void the contract (that is, act as if the contract never existed).

​

How do I find more information?

​

Insurers are required to provide a 'product disclosure statement' and an insurance guide/policy when you request a new policy or make changes to an existing policy. This documentationcontains all relevant information about the policy, including what is covered and any exclusions that may apply.

​

How do I make a Claim under a Life or Disability Insurance Policy?​

​

When you or your beneficiaries need to make a claim under a life or disability insurance policy, you or your beneficiaries should contact the insurer (or your insurance broker) immediately. 

​

If your life insurance is provided through your superannuation fund account, you or your beneficiaries should contact the superannuation fund trustee. 

​

It is important that, if you have life insurance, your beneficiaries are made aware of who they should contact if they need to make a claim. 

​

After the insurer is notified that you or your beneficiaries intend to make a claim, the insurer will require you or your beneficiaries to obtain and submit all relevant evidence. The evidence required will depend on the type of life or disability insurance and may include, for example, a certified copy of a death certificate (for life insurance) or tax records (for income protection insurance). The insurer will notify details of any further information it requires, including specific claim forms that may need to be completed.  

​

It may take months for a claim to be decided, depending on factors such as the type of cover and the complexity of the claim. 

​

If you are experiencing financial hardship while your claim is being assessed, let the insurer know as the insurer should have a process in place to assist you.

​

How do I make a complaint?

​

If you are not satisfied with the claims process or the decision that an insurer has made, you can make a complaint to the insurer (or to the superannuation fund trustee, if thesuperannuation fund trustee owns the life or disability insurance contract). 

​

While not essential, a complaint can include an explanation of your complaint, including a timeline of the events if this assists, and copies of all relevant documents.

The insurer (or superannuation fund trustee, as appropriate) must respond to your complaint in writing setting out:

​

• (a) its view on the issues you have raised (and the reasons for its view, if it rejects your complaint); and 

• (b) advising of your right to take the complaint to the Australian Financial Complaints Authority (AFCA) if you are unhappy with the response to your complaint.

​

If you are not satisfied with the response to your complaint, you can contact AFCA. 

​

AFCA is a tribunal which provides a free and independent process to resolve your complaint. ACFA reviews decisions by insurers and superannuation fund trustees and makes decisions which are fair and reasonable in all the circumstances (subject to their rules and the law). A decision by AFCA is generally binding on the insurer (and superannuation fund trustee, if appropriate) but not on you.

​

You may also be able to commence Court proceedings. Before doing so, you should obtain legal advice.