The CommInsure Issue Explained
You may have noticed extensive media coverage on a particular issue with CommInsure of late. It’s an in-depth problem with a simple solution and, like many financial issues, comes down to always sourcing professional advice before making life-changing decisions.
Here’s a rundown of the recent issue with cricket commentator Tony Grieg:
Tony received a bundled insurance policy, meaning it paid out on a Death or Trauma event. This enables someone to get the benefits of both types of cover, but on an either/or basis whilst helping to reducing overall costs.
In this instance, Tony had a $600,000 Life/Trauma policy and he received a $600,000 lump sum under a trauma claim. As it was a bundled policy, ordinarily this would mean that his life cover was reduced by the level of trauma paid out. As both levels of cover were for $600,000, a full trauma payout effectively reduced his life cover down to nil (being $600,000 less $600,000 = $0)
However, as we understand it, built into his policy was a reinstatement feature that meant, should Tony have remained alive for 12 months after a Trauma claim, his death cover would have been fully reinstated. If he died after that time, a further $600,000 would have been paid out under the life policy.
Unfortunately he passed away several weeks after the Trauma claim.
Tony’s widow has publicly claimed the policy was unfair but this is the policy they signed up for.
The case has highlighted the disconnect between public expectations (i.e., I had a heart attack and a trauma policy should pay out on that) versus policy details (what constitutes a heart attack).
The media presented this case as highlighting the shortfalls of having insurance in super (as Comminsure are the background insurer for several industry super funds). This couldn’t be further from the truth – trauma cover is not offered to industry superannuants and cannot be held within super under legislation (barring old policies held within SMSFs).
This is why we need to make ourselves clear when discussing issues such as these. If there is even the smallest thing you don’t understand within your insurance policy, ask an advisor. It’s imperative to seek advice particularly when something so critical is at stake.
If you’re clear on your policy and its inclusions, you’ll never find yourself in a situation such as this one.