When Does your Insurance Get Paid

28 October 2016
All insurances are pretty much the same when taken out. A sum is decided upon for the cover and premiums are calculated dependent on the risk and likelihood of a claim being made. The important thing - no matter what type of insurance - is that the money required is available at claim time. Based on this simple guideline, this week’s article explains what different insurances are for and when they will get paid.
 
Life Insurance which relatively speaking is the cheapest type of cover for the amount of funds paid out is payable upon the death of the insured. Fairly straight forward and not often disputed at claim time, unless there has been some issue regarding the cause of death. There is also another time when life cover can be received by the beneficiaries of a person’s estate, and that is when the insured has been diagnosed with a terminal illness and has been advised that they have less than 12 months to live. The reasoning behind this, is to allow the insured to access funds to get their affairs in order before passing, but can be used for any reason they choose. We have heard of situations, where the funds have been used to pay for overseas relatives to have some time with a family member, or on an occasion where the insured paid for one last memorable family experience.
 
Trauma or Living Assurance cover is payable upon the diagnosis of a critical illness. There are often differences between providers regarding at what level of severity the trauma claim can be paid. For example, 60 people a day in NZ are told “You have Cancer”, however, not all cancers are life threatening and consequently payments can vary greatly between different insurers products. There are other illnesses which have similar degrees of severity, and for this reason, most insurers will only pay a percentage of the insured amount dependent on how bad the illness may be. (Defined by a medical expert). In a lot of cases, the payment of one type of claim on a trauma policy will cancel the cover completely. However, it is possible to obtain insurance from one provider, whereby a claim could be made for one condition (e.g. cancer) and then if a separate problem develops (e.g. heart), a second claim would be able to be made. It is also important to know at what stage your trauma payment will be made, as access to funds immediately may be more important to some people than others who may have access to a separate source of funds.
 
Disabilty Income/ Mortgage Protection cover are two slightly different types of cover that are payable if the insured person is unable to receive an income due to sickness or accident and is unable to work more than 10 hours per week in their normal employment. Medical proof needs to be provided to support such a claim, and is payable for a period of time determined upon completion of an application. Once again, the insured person’s time scale for when the funds are required can determine when the payment is received, and longer waiting times can be used to reduce the cost of premiums.
As with any of these covers, it pays to discuss your requirements with an adviser who can go through the different options to come up with the best insurance plan that will suit your individual needs and budget.
 

Published In Whakatane Beacon

This post was written by

John White - who has written 90 posts

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