6 life insurance application mistakes that can cost you

Last updated on November 25th, 2021 at 03:19 pm by Bill Tsouvalas

Getting a life insurance policy is usually a smooth process if you have everything that’s needed on hand. The application process is the most crucial process when it comes to getting the right policy suited for you. However, try to avoid making these six application traps that can end up costing you in the long run.

1. Not understanding the definitions of terms within the policy

Any life insurance policy will come with definitions of terms that will affect how you make a claim and whether your claim will be approved based on this. Each insurer uses a definition of terms that could differ slightly from one insurer to the next which is vital that you read and understand. For example, if you take out TDP cover insurers will only approve the claim if your injury has led to being totally or permanently disabled and unable to carry out any type of work. This means even your personal work. T

2. Not submitting relevant information during the application process

When applying for a life insurance policy it is best to have all the necessary documentation on hand such as; relevant family History, previous medical contacts or your doctors’ details, sports or activities that you participate in. If you are changing from one insurer to the next, then you will be required to provide relevant information pertaining to your history with them.

3. Not answering questions

During the application process, an insurer will ask you a couple of questions that need to be answered truthfully. This is to make finding you a cover that is best suited towards your needs possible. Choosing to leave out any relevant information that has been requested for you, not answering questions or providing false information can come back to haunt you when it is time to place a claim. It can also lead your insurer to cancel your policy.

4. Not understanding the eligibility criteria to make a claim

This ties in with our first point that you need to understand what the definition of terms are for your policy to know whether you meet the eligibility criteria or not. Knowing this will help to smooth out the claim process for you to get access to your cover.

5. Not checking the exclusions on your policy

Reading the fine print is vital to ensuring that you are not met with disappointment when it comes to claiming. Exclusions that generally come with life insurance policies are:

  • Not being an Australian Citizen or resident.
  • Having a pre-existing condition that is excluded from the cover.
  • Working as a casual work or a dangerous job can limit you from getting cover from income protection policies.

6. Not having the relevant documentation to process the claim

  • A death certificate
  • The deceased’s ID
  • Your own ID
  • Your relationship to the deceased
  • Your financial dependence to the deceased
  • Their will
  • Letters of administration
  • An insurer could require more information from you which you will need to provide. Having a folder that has all the relevant documentation can assist in smoothening the process for you.

Each type of cover under life insurance will require different documentation to have your claim processed. If the policy holder has passed on, then you will need the following documents: