During the Royal Commission we received many calls and emails from clients offering their support, which was greatly appreciated.
We have a relatively small client base, but it is nevertheless not unusual for us to have numerous life insurance claims in progress at any one time. As we all know, insurance is an unpopular expense in many family budgets and is often paid with resentment, especially as premiums escalate. However, there is no doubt that Tim becomes the most popular adviser in our office when bad health strikes a family unit. It is only families who have had the unfortunate need to claim who can vouch for life insurers and the financial stability their policies provide in times of crisis.
We received some figures recently from the Association of Financial Advisers which we thought would be worth sharing. It highlights that while there were some horror stories during the Royal Commission, it has not been our experience when dealing with insurers:
- Only 1.7 per cent of life insurance claims are declined, meaning 98.3 per cent are paid.
- Only 3 per cent of income protection claims are declined, therefore 97 per cent are paid.
- Decline rates for total and permanent disability claims sit somewhere between 2 per cent and 10 per cent, which means 90 per cent or more are paid.
- 1 in 10 trauma claims are declined, therefore 90 per cent are paid.
In actual fact, during 2016, the industry paid out over $9.2 billion in claims to over 108,000 people, equating to over $26 million per day in lump sum payments.
So, while insurance will continue to be a grudge purchase for many, please do not lose sight of the fact that it will continue to be a great tool to outsource risk and ensure your financial stability into the future.