WHAT CAN WE LEARN FROM THIS ONE?
It seems as though even before you finish hearing about one “scandal” in financial services, you start hearing about the next one! And we have had some doozy’s recently.
Insurance claims not being paid is probably one of the scariest horror stories around. People (and their families) who actually bothered to recognise they were at risk, and then went the next step and did something to protect themselves should be rightfully outraged and devastated if their claim is not paid when something goes wrong. Right?
Well in general, yes of course!
But before you go using these few cases we have heard loudly about recently as your EXCUSE not to insure yourself, think about these few things:
- All Insurance is NOT the same.
- All Insurance is complex.
- You usually get what you pay for.
- Most good quality Insurance policies do actually pay out when they are needed.
- There are experts who advise on which Insurance policy suits you best, AND helps you get paid at claim time.
Personal Insurance is one of the most complex financial products available. There are multitudes of different quality policies, different definitions of reasons to pay and not to pay, and different conditions that are covered by Personal Insurance. Most Insurance Advisers take years to get the hang of all the differences, and Providers and Legislators change things regularly as well.
Is this complexity how it should be? Some argue for and some against. But with all the different definitions and types of cover, there are usually differences in cost and opportunity to claim. If all the policies were the same, you wouldn’t have options to pay for what was important to YOU as an individual (or family) or not.
I would argue that this gives opportunities to people to pay for what THEY need, which is a good thing. However, what is happening is people are not looking at Insurance as complex. They buy based on price, or they keep what they were provided with as a default, such as in their super fund, or they get the one that is easiest to organise (one click on the internet and you have a policy).
But you need to be COVERED, not just INSURED. Ticking a box and paying a premium does not always cover you for what you need. Why not go that little extra step, and get advice from someone who actually knows about it?
In general, the cheaper the cover, the less you are covered for, but with the complexity of Personal Insurance of course it’s not always that simple. (Sigh!)
Many of the direct phone or online policies are actually more expensive and cover less. They are easy to set up, but they don’t actually pay out as often as those that are set up correctly with underwriting at the time of application. A little pain is required for incredible potential to gain.
Insurance is ALL about the claim. It’s what insurance is for. You need to buy insurance for an opportunity to claim, not just to say you have a Policy.
Many of the default options in Superannuation cover way less and have way more “out” clauses than the policies provided by most Advisers. And Trauma Insurance cannot be held via Superannuation at all.
So how do you know that what you have is a good policy?
How do you know that what you are paying for will pay out when you NEED it?
- Well, you could do a degree or Advanced Diploma in Financial Planning, focusing on risk, and then get probably at least 3-4 years of experience helping clients out with this stuff so you learn it yourself. You will need to start reading Product Disclosure Statements and keep up to date as things change.
- You could keep paying your premiums and just hope it will be ok……
- You could go into denial and assuming nothing will happen to you and your family so don’t have cover at all. (After all, Centrelink will surely help you out).
- You could just put a million or so dollars in the bank so that if anything does happen you will probably be ok.
You could see a risk specialist financial planner/adviser who can assess your policies, provide advice on quality versus cost, give you information on what you are and importantly what you are NOT covered for, and then help you fill the gaps. They focus on matching personal needs to the policies, help you claim if needed, and will review the policies over time to ensure they remain good quality.
Here are some facts:
Most of the insurance claim problems that have hit the news headlines recently did NOT have a financial adviser involved at application or claim time.
Billions of dollars is paid out each year in Personal insurance claims. It just doesn’t make the news. Ask the insurers for their claim statistics, it is fascinating reading, but apparently not to the mainstream media!
And did I mention that Personal Insurance is one of the most complex financial products available?
Authorised Representative of Aon Hewitt Financial Advice Limited
Authorised Representative No. 290343
Aon Hewitt Financial Advice ABN 13 091 225 642 AFSL No. 239183
This information may be regarded as general advice. That is, your personal objectives, needs or financial situations were not taken into account when preparing this information. Accordingly, you should consider the appropriateness of any general advice we have given you, having regard to your own objectives, financial situation and needs before acting on it. Where the information relates to a particular financial product, you should obtain and consider the relevant product disclosure statement before making any decision to purchase that financial product.