Advised cover faces claims data test

Group superannuation insurance appears to outperform individual advised cover on some claim's measures, raising questions about the value of advice when it comes to protecting clients against disability.

However, acceptance rates and dispute figures only tell part of the story. For advisers, the more important question may be whether a policy will provide adequate protection when a client can no longer earn an income, particularly when occupational definitions, sums insured and individual financial commitments come into play.

This comes after The Australian Prudential Regulation Authority's Life Insurance Claims and Disputes Statistics, covering the 12 months to 30 June 2026, found acceptance rates varied considerably by cover type and distribution channel.

Death claims recorded acceptance rates of 97% for individual advised policies and 98% for group superannuation cover. By comparison, TPD claims were accepted at rates of 81% for advised policies and 88% for group super.

Paul Luu, financial adviser and life insurance specialist at Evalesco and Principal Edge, said regular policy reviews were essential to ensure insurance remained aligned with clients' changing financial circumstances.

"Insurance contracts can be complex, and often clients are not aware how a change in their circumstances will affect the suitability of their policies," Luu said.

He said advisers could use policy anniversaries to prompt clients to review their cover, highlighting common life changes that might affect their needs, including shifts in income, debt, family responsibilities and business commitments.

The distinction between occupational definitions can also have significant consequences for disability claims, depending on the terms of the policy.

An own-occupation definition generally assesses whether a person can perform the duties of their specific profession, while an any-occupation definition typically requires working in an occupation for which they are reasonably suited by education, training or experience.

"TPD and income protection contracts that having an 'own' occupation definition, may make it easier for an insurer to admit a claim as they're assessing it against the client's ability to perform the duties necessary to continue in their specific profession," Luu said.

"The fine print varies from one policy to another, and changes in the client's circumstances can also affect the outcome of a claim, which reinforces why periodic reviews are important."

He added advisers could also help clients navigate the claims process by explaining policy conditions and what to expect if they need to make a claim.

"Spending time with clients to explain their policy terms and how the claims process works can help move things along more efficiently and goes a long way towards managing expectations and easing the anxiety that a client may experience during a family tragedy or severe health event," he said.

Luu noted not every claim would be straightforward, with eligibility, medical evidence and individual circumstances potentially affecting how long an assessment takes.

The latest APRA data highlights the importance of looking beyond headline acceptance rates when assessing whether insurance provides meaningful protection for individual clients.