What's a life insurance claims rate and why should you care?

What's a life insurance claims rate and why should you care?

Recent research conducted here at Pinnacle Life indicated a cynicism about life insurance claims payments. It isn't easy to pinpoint exactly where this mindset comes from. Perhaps it's because people have experience of claims for other types of insurance declined in the past, or what we've heard in the media about claims, but the reality is that at Pinnacle Life, we've paid 99.3% of all claims since we started in 1998.

What is the claims rate?

At Pinnacle Life, the way we calculate our claims statistics is to take the number of all claims received by our customers and divide that by the number of claims paid out. All types of policies are included – Life Insurance, Funeral Insurance, Critical Illness cover, Disability cover, Income protection and any of our older types of policies.

If you want to know other companies' claims rates, you might have to ask them directly as not everyone publishes it.

Why aren't claims paid? What's the 0.7% that Pinnacle Life hasn't paid?

One reason an insurer might not pay a claim is if the claim is fraudulent. There has only been one significant false claim at Pinnacle Life. In that instance, a woman faked her own death - more than once! The first time she claimed a death, it was paid out by her insurer to a fake policy owner. She then took out new policies with Pinnacle Life and a third company and soon after tried to claim on those policies, posing as her own mother. Pinnacle Life flagged the claims as suspicious. The police were brought in, and the circumstances investigated. All claims were considered invalid.

When claims are genuine, they are usually paid without any hiccups. The more common reason for insurers to not pay a claim is when it's a claim on a Critical Illness or Disability cover policy, and the claim is for something that's not covered. Both policy types cover specific conditions, so if a claim is for something that is not one of those conditions, the insurer does not need to pay the claim. For example, sometimes, Critical Illness cover is called Trauma cover. However, this doesn’t mean it covers traumatic events. Trauma Insurance covers specified health conditions such as cancer or stroke. If a claim was for something traumatic, such as complications from childbirth or even a rare disease, they might not be covered if they are not specified in the policy. Check your own policy so that you know what’s covered and what’s not.

Why is Pinnacle Life's claims rate so good?

Everything we do, from the moment you first take out a policy, is about making sure we can pay your claim when the time comes. That means we write our policies in plain English so that you understand what you're covered for, and, most importantly, we have robust underwriting processes, so there are no surprises at claim time for you or for us. Sometimes it might be frustrating if you need medical tests or if we ask for more information when you first apply. We do that to make sure we have all the information we need upfront rather than when you need to make a claim.

One of our values at Pinnacle Life is 'Protection'. That means we aim to provide a safety net to our customers and protect them when they need it the most. Paying claims is why we are here.

If you're interested in more information about life insurance and claims, you can find some case studies at https://www.ifso.nz/information/life-insurance

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As at Feb 2021 we had paid 99.3% of all claims

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