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Insurance Disability Benefits

(i) Introduction

  • Many people with chronic illness will be able to claim disability benefits under insurance policies.

(ii) Types of Insurance Disability Policies

    • Income protection-covers your income if you can’t work because of an injury or illness.

– might include extra trauma or bed care benefits.

  • Mortgage protection insurance
    • covers mortgage repayments.
  • Consumer credit insurance
    • covers personal loan repayments.
  • Trauma insurance
    • pays a lump sum upon a particular diagnosis, eg cancer, Multiple Sclerosis, heart attack or stroke.
  • Term life insurance
    • pays a lump sum on death or maybe also Total and Permanent Disability (TPD).
    • might also pay a lump sum if you are diagnosed with a terminal illness (less than six or twelve months to live).
  • Sickness and accident insurance
    • pays lump sums for TPD, loss of use of limbs, broken bones etc.
    • might be offered under employer or union group policies e.g. Protect, Incolink or IUS .

(iii) Income Protection Insurance

  • Many self-employed people have private income protection insurance.
  • Many employees are covered for income protection as part of their employment.
  • You might be covered if you can’t do your usual job, one of the duties of your usual job or any other suitable work. It depends on the words in the policy.
  • You will be covered for fixed monthly payments or a percentage of your earnings after a waiting period 9maybe 14,30, 60 or 90 days).
  • The period of insurance payments will depend on the policy – it might be 2 years, 5 years, to age 65 or lifetime.
  • If you go back to work, you might still be eligible for partial disability or rehabilitation payments.
  • Some income protection policies also include trauma benefits for loss of use of limbs, Motor Neurone Disease, MS, heart attack etc.

(iv) Making Insurance Claims

  1. When to claim
    • Insurance disability claims should be made as soon as possible.
    • However, claims can often be made years later.
    • Claims can also be made by the estate of a person after they die.
  2. How to claim
    • There will be claim forms to fill out and medical reports and other papers to lodge.
    • You might be asked to sign medical, Medicare and tax authorities and to go to a few medical and rehabilitation examinations.
    • However you only have to give them reasonable information that is relevant to the claim and usually go to no more than 1 or 2 medcial appointments.
    • It’s important to give the right information/reports to help your claim – particularly medical reports and written submissions supporting the definition of disability in the policy. if you are too involved in the claim that can be used against you.
    • Claims can take approximately 3 to 12 months, although this can vary. .
  3. What if your claim is rejected?
    • If your claim is rejected, if your insurance payments stop, are late or reduced, or if you are being mucked around, you can lodge a formal Complaint with the insurer, an IDR complaint.
    • They have 45 days to make a new decision.
    • If you are still not satisfied, you can appeal to the courts or to an industry complaints scheme, the Financial Obudsman Service (FOS).
    • Complaints are decided by written submissions and replies without formal hearings.
    • There are limits on the types of complaints FOS can deal with.
    • It’s important to get update reports and make detailed written submissions to support an to the courts or a FOS complaint.
    • Many appeals and complaints win or are settled.

(v). Important Note – Get help

  • There are time limits for appeals to the courts and FOS.
  • Insurance claims can be complicated and take a long time but it’s very important that you at least find out about your rights.
  • Get advice and help with a claim or appeal. (See ‘Free Super and Insurance Advice Service‘ fact sheet.

Next Section: Government Superannuation Funds