We've all seen it at the movies, if not in real life. Someone clutches his or her chest and falls to the ground. It's a heart attack, right?
You might say to yourself, "Whew, if I have a heart attack, I have insurance cover and my provider will pay out."
But don't count on it. Not even being "brought back to life" with a defibrillator is going to guarantee your critical-illness (aka trauma) policy or life insurance is going to pay you, says Robert Oddy, chairman of SiFA, a professional body for independent financial advisers.
Insurance policy fine print often sets the bar very high when it comes to claims for cancers, heart attacks and a long list of other illnesses. It's something that Oddy and others believe should be addressed because it gives the industry a bad name that results in people who really need insurance not getting it because they don't trust the providers.
Commonwealth Bank in Australia, owner of ASB and Sovereign, has been hauled over the coals on television for "cheating its most vulnerable customers in their hour of need".
A Four Corners investigation found that the wording of Commonwealth Bank's CommInsure policies, which have been sold to four million Australians, made it nearly impossible for customers to claim because of unreachable thresholds. The company's former chief medical officer turned whistle-blower, Ben Koh, revealed cases of files being tampered with and in-house doctors pressured to change diagnoses so claims wouldn't be paid. If you want to be shocked, watch this video: tinyurl.com/CommInsure
One customer who Koh believed had had a heart attack had his $1 million claim turned down because the levels in his blood of troponin, an indicator of heart muscle damage, did not meet a certain threshold.
That threshold, according to Koh, was based on out-of-date definitions and he estimated around half the claims for "heart attacks" could have been declined using this dated diagnosis and that CommInsure was driven solely by profits. For the record, ASB and Sovereign have their own policy wordings and claims procedures.
Policy wordings can vary hugely. Auckland financial adviser Steve Morris had a 51-year-old client who was diagnosed with bladder cancer. One of the client's insurance policies paid out and the other didn't. "Same cancer, same client, different outcome of claim," says Morris. The insurer which didn't pay excluded cancers that did not "break through the cellular wall".
Cutting to the chase about heart attacks, in order to qualify for a payout on a trauma or life policy that pays out a lump sum on diagnosis of certain illnesses, you need to prove you have suffered a heart attack through which a portion of the heart muscle has died. An angina attack that may look and feel like a heart attack to you and me, but doesn't kill any tissue, isn't usually covered, says Oddy. The trouble is, the public don't generally understand this.
There are policies available that even advisers have trouble understanding, let alone the public.
Fidelity Life's Platinum Plus Trauma Cover, for example, has six exclusions to its cancer cover, and they're mostly not the sort of thing you and I learned in school biology. One of those exclusions is: "Prostatic cancers classified under TNM classifications as T1 (all categories) or Gleason score less than or equal to 5. ++". Don't forget that if you plan to claim on your cancer cover.
In the UK, insurers at least all have the same common descriptions, points out Michael Cave, of Cave Financial Consulting.
Insurance policy fine print often sets the bar very high when it comes to claims for cancers, heart attacks and a long list of other illnesses.
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In New Zealand, says Michael Naylor, a senior lecturer in finance and insurance at Massey University, trauma-type policies cover about 50 of about 100,000 possible medical conditions.
An approach that could make insurance less confusing for the average person, Naylor says, would be to write policies that exclude certain illnesses, rather than ones that just include a small number of common conditions.
"However, clients will occasionally find that because they have X rather than Y, they have no payout and that seems unfair to them, when the included and the excluded conditions seem very similar."
He adds that given the rarity of many conditions, they impose little cost on insurers. Good insurers could include a catch-all clause or provide a goodwill payment, thus paying out to nearly all clients.
On chest pain, Naomi Ballantyne, chief executive of Partners Life, says: "If people could claim hundreds of thousands of dollars by clutching their chests and falling down without evidence of an actual heart attack, then insurance could no longer exist. Clearly if everyone could get paid lots of money for lots of minor things, pricing of trauma would become prohibitive for everyone, meaning no cover at all even for the most serious of events."
Partners Life has a commendably plain definition of a heart attack, which goes "a part of the heart muscle has died due to the lack of blood supply to the heart muscle". There is more, but it's easy to read, so brownie points there.
Insurance companies need to draw the line somewhere. But it's not always in the right place and as the CommInsure case showed, sometimes medical professionals working for these companies are put under pressure to give a diagnosis that allows claims to be declined.
I wrote about what appeared to be such a case many years ago for Consumer Magazine. A claimant with an income-protection policy was being forced back to work because insurance company doctors declared he was well. He said he felt his only way out was to commit suicide because he felt too sick to contemplate getting out of bed. Fortunately he didn't commit suicide and has gone on to lead a productive life.
Complaints about policy wordings and how they're interpreted do get upheld by the Insurance & and Financial Services Ombudsman from time to time. One customer identified as "C" was turned down on a "heart attack" claim because her insurer said she did not have "confirmatory new electrocardiogram (ECG) changes consistent with a heart attack". An independent cardiologist disagreed and the complaint was upheld.
Likewise, a claim by "Mr X" was declined by his insurer, which argued that the troponin-T, which was at raised level in the man's case, "was a protein, not an enzyme" and therefore his heart attack wasn't proven. The insurer backed down.
Most claims are accepted, says Russell Hutchinson, managing director of Chatswood Consulting.
He agrees, however, that policy wordings are incomprehensible to the average Kiwi. Insurance companies know just how readable or unreadable their policies are and not enough is being done in this area, says Hutchinson.
The same poor wording often seen in life and trauma insurance can be encountered in standard health insurance, travel insurance, and, believe it or not, pet insurance.