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6 life insurance application mistakes that can cost you

Published on November 25th, 2020
  Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
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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:

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This guide provides general information and does not consider your individual needs, finances or objectives. We do not make any recommendation or suggestion about which product is best for you based on your specific situation and we do not compare all companies in the market, or all products offered by all companies. It’s always important to consider whether professional financial, legal or taxation advice is appropriate for you before choosing or purchasing a financial product.

The content on our website is produced by experts in the field of finance and reviewed as part of our editorial guidelines. We endeavour to keep all information across our site updated with accurate information.

Savvy is partnered with Compare Club Australia Pty Ltd (AFS representative number 001279036) of Alternative Media Pty Ltd (AFS License number 486326) to provide readers with a variety of life insurance policies to compare. Savvy earns a commission from Compare Club each time a customer buys a life insurance policy via our website. We don’t arrange for products to be purchased from these brands directly, as all purchases are conducted via Compare Club.

Savvy does not compare all life insurance policies or providers currently operating in the market. Any advice presented above or on other pages is general in nature and doesn’t consider your personal or business objectives, needs or finances. It’s always important to consider whether advice is suitable for you before purchasing an insurance policy.

For any further information on the variety of insurers compared by Compare Club or how their business works, you can read their Financial Services Guide.

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