Diana Clement: Fine print leaves many uncovered

Saturday, 16 April 2016

The New Zealand Herald

Your idea of a "heart attack" can be very different from an insurance company's definition.

By Diana Clement

We've all seen it at the movies, if not in real life. Someone clutches his or her chest and falls to the ground. It's a heart attack, right?

You might say to yourself, "Whew, if I have a heart attack, I have insurance cover and my provider will pay out."

But don't count on it. Not even being "brought back to life" with a defibrillator is going to guarantee your critical-illness (aka trauma) policy or life insurance is going to pay you, says Robert Oddy, chairman of SiFA, a professional body for independent financial advisers.

Insurance policy fine print often sets the bar very high when it comes to claims for cancers, heart attacks and a long list of other illnesses. It's something that Oddy and others believe should be addressed because it gives the industry a bad name that results in people who really need insurance not getting it because they don't trust the providers.

Commonwealth Bank in Australia, owner of ASB and Sovereign, has been hauled over the coals on television for "cheating its most vulnerable customers in their hour of need".

A Four Corners investigation found that the wording of Commonwealth Bank's CommInsure policies, which have been sold to four million Australians, made it nearly impossible for customers to claim because of unreachable thresholds. The company's former chief medical officer turned whistle-blower, Ben Koh, revealed cases of files being tampered with and in-house doctors pressured to change diagnoses so claims wouldn't be paid. If you want to be shocked, watch this video: tinyurl.com/CommInsure

One customer who Koh believed had had a heart attack had his $1 million claim turned down because the levels in his blood of troponin, an indicator of heart muscle damage, did not meet a certain threshold.

That threshold, according to Koh, was based on out-of-date definitions and he estimated around half the claims for "heart attacks" could have been declined using this dated diagnosis and that CommInsure was driven solely by profits. For the record, ASB and Sovereign have their own policy wordings and claims procedures.

Policy wordings can vary hugely. Auckland financial adviser Steve Morris had a 51-year-old client who was diagnosed with bladder cancer. One of the client's insurance policies paid out and the other didn't. "Same cancer, same client, different outcome of claim," says Morris. The insurer which didn't pay excluded cancers that did not "break through the cellular wall".

Cutting to the chase about heart attacks, in order to qualify for a payout on a trauma or life policy that pays out a lump sum on diagnosis of certain illnesses, you need to prove you have suffered a heart attack through which a portion of the heart muscle has died. An angina attack that may look and feel like a heart attack to you and me, but doesn't kill any tissue, isn't usually covered, says Oddy. The trouble is, the public don't generally understand this.

There are policies available that even advisers have trouble understanding, let alone the public.

Fidelity Life's Platinum Plus Trauma Cover, for example, has six exclusions to its cancer cover, and they're mostly not the sort of thing you and I learned in school biology. One of those exclusions is: "Prostatic cancers classified under TNM classifications as T1 (all categories) or Gleason score less than or equal to 5. ++". Don't forget that if you plan to claim on your cancer cover.

In the UK, insurers at least all have the same common descriptions, points out Michael Cave, of Cave Financial Consulting.

Insurance policy fine print often sets the bar very high when it comes to claims for cancers, heart attacks and a long list of other illnesses.