Financial counsellor Paul talks about how to locate help from your insurances.
Many people have a range of insurances that are designed to support you when something happens that affects their ability to earn income, such as an extended illness or injury, death or unemployment.
These insurances can be attached to your superannuation, for example Income Protection Insurance or Total Permanent Disability Insurance or attached to your credit contracts or loans, for example Consumer Credit Insurance.
Many people don’t know or forget they have these insurances and unfortunately this can sometimes lead to significant financial hardship including loss of home which could otherwise have been avoided.
Do you have Consumer Credit Insurance (CCI)?
Check all your loan agreements to see if you have CCI for events like job loss and illness. You may have taken a policy at the time you signed your loan contract, and the premium may even have been included in the loan. If you are still unsure contact your lender and ask for a copy of your insurance policy and instructions about how to make a claim.
Lodging a Claim
Don’t let your lender discourage you from lodging an insurance claim if you think it might apply to your circumstances.
When you lodge a claim for CCI you’ll need to provide copies of all documents that prove your change of circumstances. You should keep a record of all phone contact and all correspondence and the claim form you submit. The insurer must provide you with a progress report on your claim every 20 business days. If you have not heard from them about your claim after two weeks, get in touch.The insurer is required to notify your lender that you have submitted a claim. This notification should mean no steps will be taken to enforce the loan until the claim has been processed.
If you cannot afford to make your loan repayments while you wait to hear the outcome of your insurance claim you should notify your lender in writing that:
- You have lost your job or unable to work due to illness
- You are unable to make a payment that is due
- You have lodged a claim on your consumer credit insurance.
- Request that the lender postpone all action pending the outcome of the insurance claim, and ask them to confirm their willingness to do so in writing. If they do not agree, lodge a complaint with them, and if they still don’t agree, lodge a complaint immediately with the Australian Financial Complaints Authority.
If You Need Your Claim Paid Urgently
If you’ve lost your job and have lodged a CCI claim, and you can show urgent financial need of the benefits of the claim, your insurer should:
- Fast track the claim assessment and decision
- Make an advance payment to alleviate your immediate financial difficulties within five business days of you satisfactorily demonstrating financial need
- Notify any financial institution you have told them has an interest in your claim.
If Your Claim is Denied
If your claim is denied, and you don’t think it should have been, you should immediately lodge a complaint with the insurer’s Internal Dispute Resolution department requesting that the matter be reconsidered. If you are still not satisfied with their decision you should ask the Australian Financial Complains Authority to investigate your right to a payout under your policy.
Peter approached a financial counsellor for assistance after being laid off from his full time job. He had two credit cards with his bank, both with large balances.
When we reviewed his credit card policy, we saw that he had taken out CCI insurance which covered involuntary job loss. He was entitled to claim three times his minimum monthly repayment for up to six months with no waiting period. Peter was able to continue to look for new employment without the financial stress of additional credit card repayments. He successfully found work after three months.