Ok, it’s travel insurance not life insurance.

But when insurance companies pull out the old ‘weasel clauses’ to get off paying what should be a legitimate claim, it gives all insurance companies (including life insurance) a bad name.

I’m doing a lot of travelling around the world lately and on a recent flight from South Aftrica to London, someone in “luggage handling” prised open my bag, went through my belongings and stole my camera.

Ok. No problem. Isn’t this the reason that I took out travel insurance with Travelsure??

But alas… my claim was rejected because I did not report the theft to the police in London within 24 hours as stated in the policy – I was referred to the small print on page 13 and also somewhere on page 17.

How stupid I was not to open my bag and check what was missing right there on the floor next to the luggage carousel. And never mind that I didn’t notice the camera was stolen… because the thieves left the camera bag… which I opened only 72 hours later.

You see, with Travelsure, ‘reasonable circumstances’ that mitigated against my notifying the authorities within 24 hours are irrelevant.

It seems that Travelsure couldn’t wait to dig out the weasel clauses and do away with my claim! Seriously efficient they are… my claim was rejected in 5 minutes.

“That’s insurance for you” – people will say. ‘No latitude’… ‘no discretion’… ‘no allowance for the circumstances of each case’… ‘quick to take your money’… but full of excuses when you have a claim…

So how about this tagline then?…

Travelsure…. taking the sure out of travel…

Ok, so it’s a US story and not a New Zealand story.  

Nevertheless, it makes ugly reading and it portrays the insurance industry in a bad light. People read stories like this and would be forgiven for thinking that all life insurance executives are a bunch of money-grabbing fat-cats. My point is that AIG’s behaviour doesn’t only affect AIG. It affects life insurance companies all around the world.     

The earlier story was about AIG in the US making a loss of $85billion in 2008 and being bailed out by the US government to the tune of $170billion.  A controversy erupted over fat cat bonuses to AIG executives of $165million!!!… which were later reported to be $218million… to the executives accountable for the company’s demise.  

We commented on this story on our blog when the story broke (here and here) but now there’s more…

It seems that whilst executives pledged to pay back their ill-gotten gains, only $39million has actually been paid back. The rest is still being recovered. Now, to cap it all, the company is all set to pay its executives another $143million in retention bonuses.

Oops.

Thankfully not all life insurance companies behave this way.

A question from Janelle…

“Can I ask why you don’t offer a comprehensive product range which includes trauma insurance?  My husband and I have life and trauma insurance.  As I understand it they are linked.  But we can’t move them both over to Pinnacle because you don’t offer trauma insurance so what do you suggest?”

Answer…

Indeed Pinnacle Life does offer a Trauma product.

On the Pinnacle Life website there is a simple Trauma product called ‘Serious Illness Cover’. It covers the ‘big four’ trauma conditions (cancer, stroke, heart attack and heart bypass surgery) that typically account for 90% of all claims.

If you already have an existing policy for life cover and trauma cover you can apply to switch your policy to Pinnacle Life. Pinnacle will attempt to replace it with 20% lower premiums. You can apply online through the Pinnacle Life website. Just go to the product selection screen (second page) and you will see the ‘Switch your policy’ option there.

 Question from Grant

We have a broker who argues the value he offers is when a claim is made. Thankfully we have yet to test this, but I can well imagine that neither my wife nor I would be in the best headspace to submit or let alone argue a claim with an insurance company. How does Pinnacle counter this point?  

Answer

There may be a lot of variability when you submit an accident claim for your car, or a health insurance claim. So maybe if an insurance broker goes in to bat for you it could be helpful in some circumstances.

But for a life insurance claim, it’s relatively straight forward… your are either dead or you are not dead. And ‘dead’ is usually quite easy to prove. All you need is a death certificate and Bob’s your late uncle.   

Given that Pinnacle Life is in the business of life insurance (not car insurance or health insurance) , Pinnacle Life typically doesn’t spend a lot of time haggling over claims.

So, would you better off if you used a broker to submit your claim? Personally I don’t see the point.