Income protection insurance, also sometimes called salary continuance insurance, is basically what it sounds like: an insurance benefit that protects your income. It’s a payment that you can claim if you cease work due to illness or injury which pays you a monthly benefit to replace your income. It’s great when the claim is accepted, and payments commence, but what are some of the reasons your income protection claim may be rejected?
Like all insurance benefits, to be paid you must satisfy all of the relevant terms and conditions of the policy and also convince the insurer that you satisfy those terms.
Sometimes, the insurer will decide that the relevant terms are not satisfied and reject the claim or decide to pay the benefits at a reduced amount. The following covers some of the main reasons that income protection insurance claims are rejected.
It’s important to understand the requirements of the insurer and, importantly, the insurance policy before you lodge your claim. Ensuring you satisfy all the requirements will increase the likelihood of a successful claim. If, however, your claim is still rejected, contact us for some free advice about your options to appeal that decision.
4 key reasons your income protection claim is rejected
You don’t satisfy the relevant disability insurance policy terms
This may seem like a pretty obvious comment, but it’s important to understand what the requirements of your policy are and make sure that you have evidence to support that you satisfy those requirements.
Under most income protection insurance policies, benefits are payable if:
- you are either unable to work at all (totally disabled) or only able to work in a reduced capacity (partially disabled) due to injury or illness.
- you have suffered a reduction in income; and
- you are following the advice and under the care and attention of a doctor(s).
To be successful in a claim, you will need to show that you meet all of the above requirements, not just some of them.
Most policies will have a waiting period. This is a period of time that you must be partially or totally disabled before you can be paid a benefit. You can usually satisfy this waiting period if you are either totally disabled or partially disabled.
However, most policies require that you be totally unable to work for a week or two before you can return to work (become partially disabled) and still be eligible for payments at the end of the waiting period.
You can learn more about waiting periods in our earlier blog, “Income protection waiting periods”.
You do not have ongoing doctor's support
You prove your inability to work due to your illness or injury (and satisfy the policy terms) by getting your doctors to complete claim forms (sometimes called Medical Attendant’s Statements), commenting on your work capacity, and providing other details about your medical treatment.
Without the support of your doctors, it is very difficult to successfully make an income protection claim. Usually, the doctors will need to comment on (at a minimum):
- your diagnosis;
- the likelihood of you getting better with treatment;
- the impact of your condition on your work capacity (in the role that you previously did).
In some cases, we have been able to get a claim accepted without a supportive Medical Attendant’s Statement and relying on reports which your doctors have previously completed for you and the doctor’s clinical notes. But, for this approach to be effective, these existing reports and documents will need to comment on the above things.
Also, most income protection policies require that you be under the care and attention of a doctor and that you are following reasonable medical advice or similar. This is proven based on medical opinions and your doctor’s clinical notes.
Therefore, if you are not regularly seeing a doctor about your claim-related illness or injury or if your doctor does not support your claim that your work is impacted by your illness or injury, you may not be successful with your claim.
Under most income protection policies, the time that the waiting period starts is called your Date of Disablement, and the Date of Disablement may not happen (and the waiting period may not start) until you see a doctor for the first time. This can be a problem if you don’t see a doctor immediately before or after you cease work.
This can cause issues for the assessment of the claim because:
- your insurance cover may not be active when the Date of Disablement happens, which will usually mean that the insurer will say you cannot make a claim or they may reject your claim; or
- the insurer may calculate your pre-disability income over the 12 months before your Date of Disablement (instead of the 12 months before you ceased work), which can reduce the amount of the monthly benefit that you are paid.
Pre-existing condition exclusions
Some income protection insurance policies will have conditions which say that you are not entitled to make a claim for a condition which first occurred or first arose before the insurance policy started. How the policy is worded will depend on the policy terms and the way that the policy started. For example, did you apply for the policy directly, or did you get it through your superannuation account?
Importantly, no matter what the policy says about pre-existing conditions, we can use the relevant laws (the Insurance Contracts Act 1984) to read down the pre-existing condition exclusion so that only conditions which you could reasonably be aware that you suffered from before the policy can be excluded.
If your income protection claim has been rejected due to “pre-existing conditions”, get in touch for some free advice.
Non-disclosure
When you apply for a policy of insurance you have a duty to disclose all things that you or a reasonable person would know to be relevant to the insurer’s decision to cover you, and a duty to not make misrepresentations.
If you have to make a claim, the insurer will usually check that you complied with your duty of disclosure when you applied for the policy as part of its assessment of the claim. If the insurer can prove that you breached your duty of disclosure, they may have a right to avoid or amend your policy (to add exclusions). This can be the case even if the things you are alleged to have not disclosed are not relevant to your current claim.
This is why insurers sometimes ask for your medical history for a period well before the injury or illness which caused your income protection claim. It's also why they may ask for the details of injuries or illnesses which are not relevant to your claim.
The remedies which an insurer has if they can prove there is a non-disclosure or a misrepresentation vary depending on the circumstances. An insurer usually has to prove various things to rely on those remedies, including, in some cases, that you were fraudulent when you made the alleged non-disclosure or misrepresentation.
Get help from an income protection lawyer
Insurers often get it wrong and reject income protection claims (and other disability insurance claims like TPD and trauma claims) or void insurance policies when they are not allowed to do so. So, if your claim is rejected, you should always get legal advice about your options to appeal the decision. Time limits apply to appealing these decisions, so you should not delay.
Contacting Berrill & Watson
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