Just because the insurance company didn’t ask the question, doesn’t mean you are covered

Cara Brett 6 June 2015


I have a confession to make! Most of my contributions to this blog are inspired by questions and comments from my friends. If they are reading carefully enough, they would probably realise that they tend to feature quite heavily in it albeit on an anonymous basis.

Recently a friend of mine made a comment I found very interesting. We were talking about insurance and my criticism of the terribly misleading insurance ads on TV. I was explaining how even though the insurance ads on TV say they only ask you your gender and your smoking status, it doesn’t mean you will be covered if you have had a pre-existing injury.

She was blown away! How can they not cover me when they didn’t even ask the question? This is a very valid question.

We all know the insurance ads I’m talking about, right? I have already expressed my view on these in Why you shouldn’t buy life insurance off the TV until you read this. Now if you were to call this insurer today, go through the 2 questions and then start paying premiums you would technically have insurance cover.

What you haven’t considered however is the terms of that insurance cover. Usually, insurance like that will have a ‘pre-existing clause’. That means that if you ever try and claim they will ask you a LOT more questions. If during those questions (and their investigations) they find any illness or injury you had prior to taking out the insurance cover relates to your current illness or injury, they will deny your claim.

An example of this is if you have a bad back. If you ever make a claim for a period of time you couldn’t work because of your back, the insurance company would do some research on you and find out whether you have ever had any issues prior to getting the insurance. If you have, your claim would be denied.

Now I’m sure you are thinking, I don’t have any pre-existing injuries. Think again. Just take a moment and think back to any doctor’s visit you ever had. Any blood test you received. Any medication you have ever taken. If the insurer finds something in your history that suggests you may have had this injury or illness before, they may just consider your claim is ‘pre-existing’.

But that’s not fair!

No it’s not and in all honesty a lot of the time you can argue they weren’t related (particularly if you have a good lawyer), but why would you want to go through that? At Bounce Financial we tend to recommend products that have a level of ‘underwriting’. This means that at application time, they will ask you the questions up-front before giving you the insurance. You can tell them about all your doctor’s visits and illnesses. They then decide whether you are covered. This essentially moves the questions to the start and not at the time of claim.

This means that any disputes about cover you have upfront. If the insurer denies you cover and you disagree, you can go to another insurer. This way you know you are covered (or not covered) should you ever make a claim instead of only finding out you aren’t covered at the time of claim. It’s this certainty which is important to our clients.

If you’re wondering whether you have the right insurance in place and whether you will be covered at time of claim, why not give us a call to talk about it. We would be happy to meet with you for a cup of coffee (at our cost) to talk about how we can help you.

This post is from Ben Brett. Check out our details in the About Us page.

Posted in: Ben Brett, Insurance and Financial Planning

About the author: Cara Brett

Cara Brett proudly heads up Bounce Financial - founded in 2014 after a successful, decade-long career in the financial services industry. Cara’s experience encompasses both the financial product and financial advice sides. This gives her a comprehensive and holistic knowledge of all facets of financial planning.