Warning: Personal insurance is becoming impossible to get!

Personal insurances such as Income Protection, Life insurance and Total and Permanent Disability (TPD) are becoming impossible to get unless you are in perfect health. This change has occurred gradually over the past few years but has now reached the point that it’s become a real concern. This has a number of consequences which I discuss below.Insurers have a bad nameWe heard some shocking stories last year via the Banking Royal Commission about insurance companies including questionable and even unethical sales tactics, unreasonably denying paying claims and so on. I’m not sticking up for the insurance companies. Their tactics are boarding on criminal. However, also, a big contributor towards these problems is that people don’t understand what they are buying.When it comes to insurance cover, the advantage of “no questions asked” might seem convenient, but it just isn’t in your favour. You want to ensure the insurer comprehensively underwrites your cover before they put the cover into force. This includes asking you questions, undertaking medical checks, reviewing medical history and so on. Doing so leaves them less room to use the excuse of a “pre-existing condition” to deny any future claim.Also, it’s important to understand the quality of the policy. Quality refers to the terms and conditions and definitions within a policy document. These all impact how comprehensive the cover is. If you get these two things right (i.e. quality and underwriting), you are much less likely to experience problems or nasty surprises down the track.What has changed?It is the underwriting and assessment process that has changed over the past few years. Insurers are, in our opinion, being over-stringent.Normally, if an insurer believes that you have a pre-existing health condition, they can take one of four actions:1. Approve the cover anyway (this is very unlikely); or2. Add an exclusion on the policy (meaning that you are not covered if that health concern causes you problems); or3. Add a loading onto the premium (i.e. charge a higher premium); or4. Decline the cover.A policy exclusion or outright decline are the most common outcomes – even for minor, inconsequential, asymptomatic health conditions! Lately, it seems that unless you are in absolutely perfect health, it is difficult to obtain exclusion-free insurance cover.Do health concerns have to be major?In short, no. This is what is so frustrating i.e. getting a decline or exclusion for a minor past medical condition. Some examples include:§ A back exclusion for a client that liked to get relaxation massages spasmodically.§ An elbow exclusion because a client had a once-off tennis elbow injury caused by a lot of typing during an intense study period. The jury was not ongoing, and clients was symptom free.§ Spine exclusion based on regular chiropractic visits for preventative reasons only (client plays a lot of sport) – no injury treatment.§ An insurer limited the clients benefit period to 5 years (period usually expires at age 65) plus added a 75% premium loading because the client worked long hours and had a high cholesterol reading.Mental health has become a ‘challenge’In Australian, mental health conditions are the third most common cause of TPD claims, and the second most common cause of income protection claims. As such, insurers are becoming more conscious of these risks and mental health exclusions (and even declines) are becoming more common.We have had situations wheMy new book is available for pre-order now: Pre-ordering the book will help me get it into bookstores. So please do me a favour - please consider pre-ordering now - links and pre-order bonus are available here: https://prosolution.com.au/book-preorder-bonus Do you have a question for the podcast? Email us at [email protected]. If you're interested in working with our team and me, discover how we can work together here: https://prosolution.com.au/family-office-servicesIf this episode resonated with you, please leave a rating on your favourite podcast platform. Subscribe to my weekly blog: https://prosolution.com.au/stay-connected IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.