When applying for life insurance, particularly during the health declaration stage, individuals frequently wonder: “Will the insurance company discover if I don’t disclose my medical history?” “What happens if I forget to mention a medical history from years ago? Will this affect my claim?” “How can I ensure a thorough declaration to prevent future conflicts?”
There are also common misconceptions about insurance, such as: “Insurance is a scam; they assure you everything is covered when you apply, but during claims, they only respond with ‘we don’t cover this’ or ‘we don’t cover that.’
In reality, these problems cannot be entirely blamed on insurance companies. The terms and conditions are clearly stated, and it is only when they are misrepresented by those with ulterior motives that consumers are misled.
Therefore, some may ask, in what situations will an insurance company look into my medical history? And what methods do they use for these investigations?
01 “Red Flags” Triggering Claim Investigations
Insurance companies do not initiate claim investigations arbitrarily; rather, they do so based on risk assessment and anti-fraud measures. The following situations are highly likely to trigger a comprehensive investigation:
- High Claim Amount: When the claim amount is substantial, such as critical illness claims exceeding $500,000, $700,000, or $1,000,000, or medical claims exceeding hundreds of thousands in a single instance, insurance companies may conduct thorough verification to rule out moral hazard.
- Claim Occurring Soon After Policy Inception: Claims related to major illnesses, deaths, or high medical expenses that occur shortly after policy inception (especially just after the waiting period or within one year) raise suspicions of undisclosed pre-existing conditions at the time of application.
- Medical History Doubts or Conflicting Information:• Exposure of Pre-existing Medical History: Claim documents (e.g., medical records, examination reports) clearly indicate that the illness existed or had obvious symptoms prior to policy inception.• Inconsistent Information: Significant discrepancies between the health declaration made at the time of application and the medical records or social security/medical insurance records provided during the claim (e.g., declaring no medical history while medical records indicate long-term medication use).
- Suspicious Accident Cause: Vague details surrounding the accident, lack of witnesses, questionable police records, or unexplained causes of death (particularly involving suicide exclusion clauses) can trigger further investigation.
- Frequent Claims or Abnormal Patterns: A pattern of repeated small medical claims within a short timeframe, or claims that exhibit illogical patterns, may raise red flags.
- Third-Party Reports or Suspected Fraud: Receipt of tips or reports suggesting potential fraud related to the claim can prompt an investigation.
02 Investigation Channels
Claim investigations will be conducted by claim assessors and officers.
- Direct Inquiry with Medical Institutions: Claim assessors will inquire about the insured’s medical records. After verifying identity and obtaining authorization, medical providers will supply the relevant records. This method ensures detailed and accurate medical information and facilitates direct communication with the provider to understand the insured’s specific condition and treatment history.From this data, insurance companies can ascertain the insured’s visit times, hospitals, diagnoses, and expenses, thereby assessing their health status and past medical history.
- Medical Information Sharing Platforms (e.g. My Health Record/Medicare): Insurance companies can query medical records through these platforms. Utilizing medical information sharing platforms for record inquiries is efficient, offers good data integration, and allows quick access to the insured’s medical records from multiple institutions.
03 Insurance Application Advice
- Comprehensive and Truthful Declaration of Past Medical History:When applying for insurance, applicants must undergo medical underwriting, which involves declaring all past medical history. This information is crucial for assessing foreseeable risks and forms the basis for the insurance company’s underwriting decisions. Truthful disclosure of medical history is a legal obligation in Australia, and applicants must adhere to the principle of utmost good faith by disclosing all material facts, including past medical history. Failure to fulfill this obligation, whether intentionally or due to gross negligence, may lead to the insurer terminating the contract or refusing claims due to dishonesty during the underwriting process.
- No Need for Pre-Application Medical Examination Unless Necessary:Applicants should avoid undergoing a medical examination before applying for insurance. If health issues are discovered during prior applications, this could lead to exclusions in coverage or hinder the ability to obtain insurance. Therefore, a medical examination should only be conducted if specifically requested by the insurer during the application process.
Insure with Confidence, Claim with Peace of Mind
Life insurance in Australia offers numerous advantages, characterized by “strict entry and lenient exit,” short waiting periods, affordable premiums, broad coverage areas, and flexible claim procedures. These features provide comprehensive and efficient protection for policyholders. By adhering to the rules and truthfully declaring their medical history, policyholders can safeguard their rights and successfully receive claims.
By consistently following the principle of good faith and providing accurate information, insurance can serve as a reliable safeguard in our lives, securing our future.
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Author Profile: Jeffrey Liu, JP, is the founder and principal adviser of Hippo Insurance (aka: Hippo Wealth), with a deep expertise in wealth protection. His extensive experience includes roles in the wealth management divisions of Westpac, ANZ, and a local multi-family office. As the host of “Riches Talk,” a podcast dedicated to cultivating personal and business growth, Jeffrey has established himself as a thought leader in developing life riches. His insights have been featured on SBS, The Australian, and Channel 7. Notably, he was a semi-finalist on Australia’s Got Talent in 2010. Learn more at http://www.hippoinsurance.com.au
