Caught short: Income protection complaints

When you are ill or injured badly enough that you are unable to work, the stress mounts with the bills that don’t stop just because you have. And you certainly won’t have the time or energy to make income protection complaints if you believe your insurer isn’t doing the right thing.

Lyndal Jordon was undergoing treatment for gastric cancer when she received further bad news. She was told the payments from her super fund for income protection and terminal illness were much less than expected because she was only paying for the “default” insurance.

 

 

“When I explained I wasn’t aware, they said, ‘it’s up to you to request to step up in your insurance policy if you’re not happy to stay on default payment’,” she told ABC News.

Lyndal is not alone. Super Consumers Australia found one in four Australians don't know they are paying for default insurance or don’t understand it.

It’s just one of many complaints made about income protection insurance and they are far from limited to superannuation funds. According to the Australian Financial Complaints Authority (ACFA), income protection has been the most complained about life insurance product since 2019. It can make you wonder if income protection insurance is worth it.

What are common income protection issues?

You make a claim for income protection payments in the same way you would any insurance. Contact the superannuation fund, broker or insurer you bought income protection from and ask what process you need to follow.

If you are struggling because of the illness or injury, nominate a friend or family member to handle this for you. Better still, talk to a loved one about this scenario just in case it happens – it's better to have a plan in place and never use it than not know where to turn when you’re at your worst.

Even if you have a plan, however, things can get complicated when you or your loved one submit a claim. Common complaints about income protection insurance include:

• • Delay in claim handling
  • Incorrect premiums
  • Waiting too long for benefits
  • Benefits being underpaid
  • Claim being denied

 

 

Why has my claim been denied?

There are many reasons why your income protection claim could be denied. The insurer may decide you have not:

• • Met the definition of disability as outlined in the policy
  • Supplied sufficient medical evidence that you are unable to work
  • Disclosed a pre-existing condition before taking out the policy
  • Paid your premiums on time
  • Met the required waiting period before benefits can be paid
  • Met other conditions outlined in the policy

If your claim has been denied, the insurer must clearly outline the reasons. If you think they may be missing vital information, contact them and provide extra details. Be polite and calmly explain what they are missing. Ask for a review of the decision.

Making a complaint

Most insurers are bound by the General Insurance Code of Practice, which makes commitments to consumers about how they will be treated, including providing timeframes for claim decisions and processes for making a complaint. You can see the list of code subscribers on the Insurance Council of Australia website.

 

 

If you are unhappy with how an insurer is dealing with your income protection claim, or have had a claim rejected, lodge a formal complaint with them first. Outline your grievance in detail and ask for a written response.

You can seek legal advice, or escalate the issue to AFCA, which can make binding decisions against financial firms involved in a complaint. Issues they examine include:

• • Premiums incorrectly applied or calculated
  • Information that wasn’t disclosed or that was misleading
  • Denial of your claim, or the value of your claim
  • Delays in decisions

Or let us help you handle it. We know how stressful dealing with insurance issues can be, but none more so than when you are at a vulnerable place emotionally or physically. You can make a complaint with us.