Sometimes we meet prospective clients who have negative impression towards life insurance companies due to their pass experience or they have listened to negative feedback from people around them.
People also think insurance companies will try their best to avoid paying claims. But, this isn’t always the case. Read on to find out more!
Life insurance companies are not all to be blamed especially on medical insurance claim. A life insurance company will not simply reject a claim, unless due to the reasons below:
- The illness does not fall within the 36 critical illnesses
- The illness is not yet critical and does not fulfill the terms and conditions of the policy
- Nondisclosure/cheating
- Policy lapsed
I have clients referring their friends to me when their friends face difficulties in making claim with their existing policy. After listening to their explanation, I have the conclusion below on why “insurance company” rejects their claim. It is mostly due to:
- Nondisclosure
- Suspect of nondisclosure
- Agent inexperienced/lack of knowledge to help
- Agent refuses to help, simply gives excuses to avoid making claim
- Insurance company staff inexperienced/refuses to help
I have a few typical cases that I think many people will be confused with it if they are not familiar with insurance terms and conditions especially for medical insurance.
Removal of cyst during caesarean
17 years ago, there was this lady who found a cyst in her womb towards the later stage of her pregnancy. Due to some complication, she had to undergo a caesarean to give birth to her baby. Due to this reason, her doctor suggested her to remove the cyst while performing the caesarean. The removal of the cyst cost her over RM2,000.
She was told by the agent that the surgery cannot be claimed because it was related to maternity. Medical insurance policy clearly states that anything with regards to maternity can’t be claimed. Therefore, she terminated her policy after the premium was due in the same year. Two years later, we met and she shared her experience and conveyed her negative impression towards medical insurance and insurances companies.
After listening to her story, I decided to help her make the claim simply because the cyst has nothing to do with maternity, it is an illness! Even though the surgery was performed during the caesarean surgery but the removal of cyst incurred a different amount of money which is separate from the cost incurred for the caesarean.
My only concern was her policy has lapsed for two years and the insurance company has all rights to reject her claim. Fortunately, the insurance company was willing to pay her the claim.
Diagnosis of Cancer during 30 days premium due grace period
Three years ago, a businessman was diagnosed of nose cancer. He bought a 36 critical illnesses term policy through a unit trust company. He was so worried as everyone around him told him that the insurance company will definitely reject his claim due to the reasons below:
- He was diagnosed with nose cancer after the policy premium was due.
- He has not paid the premium.
- His policy was only bought for 3 years and he had not paid for his 3rd year policy premium during the 30 days grace period.
- People around him doubted that the insurance company will pay him RM350,000 because the 3 years’ accumulative premium is not even 3% of his coverage.
The combination of the above reasons discouraged him to make a claim. Life insurance companies will not simply give unreasonable excuses to reject a claim. As his condition fulfill policy’s terms and conditions, and as at the same time the policy did not lapse, he was actually allowed to make the 36 critical illnesses claim.
Removal of cataract right after 120 days; insurance company refuses to issue guarantee letter
Cataract is not something that develops in a short term. This client found cataract in his eye when he brought his mother to an eye specialist for eye treatment. He has short sightedness and he complained to the doctor about his condition and asked the doctor to do an eye test for him. The doctor found out that cataract was the reason for his blurriness. The eye specialist suggested him to do a surgery to remove the cataract. During his admission in hospital, his insurance company refused to issue a guarantee letter to the hospital. The reason given was that his diagnosis was very close to the 120 days waiting period. He was very worried that he will be unable to make a claim.
After a series of fact findings, I decided to make a claim for him due to the reasons below:
- He genuinely does not know that he had cataract as he never consulted any general physician or eye
specialist before. - He had short sightedness and it is normal for people who had short sightedness to overlook cataract issue.
- Insurance company sent him for a medical checkup before said insurance company accepted his proposal. The panel doctor did not mention that he had cataract after the medical checkup.
With the solid reasons given to the insurance company, he managed to claim the medical bill on reimbursement basis.Based on all cases that I encountered, my conclusion on the failure of making a medical insurance claim is mostly due to lack of knowledge and the inexperience of making a claim!
I have also heard feedback from practitioners that some people have an impression that a financial planner does not know much about insurance and that they only know about investment. If they want to buy insurance they should buy from an insurance agent only. Is this statement correct? Let’s look at the table below:
It would be true if you are consulting a Financial Planner licensed by the Securities Commission only. Therefore, you must make sure that your financial planner is also a financial adviser who is also licensed by Bank Negara to provide insurance advisory and planning. Only those who have both licenses are allowed to provide holistic financial planning.
Michelle Teo is the Co-Founder and Executive Director of Axcelink Wealth Advisory Sdn. Bhd. She has 20 years of vast experience in the financial service industry. A dynamic and highly respected teacher & public speaker, she provides talks to the public, universities, public listed companies, investment club and association for the purpose of creating public awareness of the importance of financial planning. She can be contacted at 03-7983 9985, email: advice@axcelink.com.my or visit www.axcelink.com
