Most claims in New Zealand are paid, and that's something the industry should be proud of. But while the vast majority are accepted, you might wonder about the ones that aren't. Here are the most common reasons some claims don't get paid, and what happens if yours is one of them.
Reason #1: You recover before your waiting period is over
For some covers, particularly income protection, you'll choose a waiting period. This is the amount of time (for example 4, 8 or 13 weeks) that must pass before you're eligible for a claim to be paid. If you're back on your feet before that period ends, the claim won't be paid for those weeks.
When you take out insurance, it could be years before you need to claim. Your chosen waiting period can easily slip your mind. That's why it pays to re-look at your policy every year, to make sure your waiting period still works for you.
Reason #2: Your condition didn't meet the medical definition
For some cover types, claims are assessed against a very specific medical definition. This definition is outlined in your policy, which also includes the exact ins and outs of your cover. Insurers use medical documents and other key information to determine whether your condition meets the policy's specific definition.
The wording of these definitions can get pretty technical. If you're ever unsure, you can always talk to your adviser's claims team to check that you're fully across your cover.
Reason #3: Relevant information wasn't disclosed
When you take out a policy, the insurer asks all sorts of questions and gathers information relevant to your application. They use those findings to figure out the cover they can offer. In rare cases, they might discover at claim time that certain information wasn't initially shared. This can affect their ability to pay out your claim.
Luckily, it doesn't happen often, and it's easy to avoid. Just let your adviser and insurer know everything from the get-go, and this issue is unlikely to crop up come claim time.
When in doubt, disclose it
- Over-sharing on an application never causes a problem.
- Under-sharing can cost you everything at claim time.
- If you're unsure whether something is relevant, tell your adviser anyway.
Reason #4: Your treatment isn't medically necessary
This specifically applies to private medical cover, which helps pay for the cost of medically necessary treatments and procedures. In most cases, this cover won't pay for "elective" treatments, procedures that might improve your health but won't actually stop or cure your ailment, treatments that manage symptoms of an ongoing condition with no current cure, or procedures that might help you avoid developing a certain condition in the future.
Reason #5: Your condition is excluded under your policy
At the time you take out insurance, you could have an existing condition (or high-risk job or dangerous hobby) that's more likely to lead to a future claim. If so, your policy might come with certain exclusions or restrictions. For example, if your left knee has already suffered several injuries, your policy may have a "Left Knee" exclusion, so in almost all cases, you won't be able to make claims for issues to do with your left knee.
Any exclusions in your policy will always be clearly explained upfront, and they can often be reviewed and possibly removed. If your circumstances change, like leaving a high-risk job, let your financial adviser know. They can talk you through the amendment process.
Almost every declined claim is decided before you ever make it, at the application, not the claim.
How to make sure your claim is paid
- Disclose everything fully and honestly when you apply.
- Read and keep a record of your exclusions and definitions.
- Understand your waiting and stand-down periods, and review them annually.
- Keep your premiums up to date and your contact details current.
- Use an independent adviser who helps you complete your application accurately and reviews your cover over time.
A good broker does more than find you cover. They help you set the policy up so it actually pays when you need it, and they advocate for you during the claim. If you're not sure whether your cover would respond the way you expect, that's exactly the conversation worth having now, not at claim time.
Frequently asked questions
Why do some insurance claims not get paid?
Common reasons include recovering before a waiting period ends, the condition not meeting the policy's medical definition, relevant information not being disclosed at application, treatment not being medically necessary, or the condition being excluded under the policy.
What is the duty of disclosure?
When you apply for cover you must answer the insurer's questions honestly and completely. Leaving out relevant health or lifestyle information can affect whether a claim is paid.
How can I make sure my claim is paid?
Disclose everything fully at application, understand your exclusions and definitions, know your waiting periods, keep premiums current, and use an adviser who helps you apply accurately and reviews your cover over time.
This article is general information only and not personalised financial advice. Policy definitions, conditions and claim outcomes vary by insurer and circumstance. For advice tailored to your situation, speak with a licensed financial adviser.
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