By OmbudService for Life and Health Insurance
This blog has been adapted from the OLHI’s website, originally posted here.
When diagnosed with breast cancer, having a life and health insurance policy can be an important tool to help you offset the financial toll it can take on your life. But these policies can be confusing. Unless you work in the sector, all the industry-specific language, details, and different clauses and subclauses might sound like a foreign language.
But don’t worry! You’re not alone in this. This guide will help you make sense of your insurance policy.
What’s in your policy?
- Policy benefits: Your journey begins with the benefit details of your coverage. This section’s title varies from company to company. Typically, it is titled Benefits Schedule, Policy Specifications, Policy Details, or a similar term. A Policy Benefits section summarizes your policy. It includes details like your policy number, coverage amounts, policy duration, and premium amounts.
- Definitions: Every policy includes a definitions section. Understanding these terms is critical to making sense of your policy. For example, ‘beneficiary’ in a life insurance policy refers to the individual receiving the payout upon the life insured’s death. Read the Definitions section carefully. If you find terms you don’t understand, consult this comprehensive glossary of insurance terms or contact your insurer for an explanation.
- Coverage: The Coverage section explains what your policy covers and for how much. Health insurance coverage might include hospitalization, medication, and surgical procedures. Life insurance coverage usually includes the death benefit and may also encompass situations like terminal illness. Disability insurance coverage usually makes monthly payments to replace income if you become disabled and are unable to work.
- Exclusions: Exclusions clarify what a policy won’t cover. A close read of this section will prevent unfortunate surprises later. Never assume you have coverage for a particular situation or service – read the Exclusions to know what not to expect.
- Limitations/Restrictions: Limitations are conditions or procedures covered under a policy but at a benefit level lower than the norm. Restrictions are conditions or procedures covered but with some conditions.
- Premiums: Premiums are the amount you’ll pay to keep the policy active. Knowing how much you must pay every month and what day payment is due is crucial. For example, if you default on a life insurance payment, you lose your coverage if you don’t make the payment within the grace period.
- Beneficiaries: For some types of policies, like life, annuities, critical illness or disability policies, you’ll need to designate who will receive the benefits in the event of your death. The beneficiary is often, but not always, a spouse or partner. Make sure this information is correct and update it when your circumstances change.
- Claims: Lastly, your policy will explain how to file claims. Familiarizing yourself with this process can prevent complications during a challenging time.
Four Things Often Overlooked in Insurance Policies
The sheer volume of information can be overwhelming when reading an insurance policy. Here are four common things consumers often overlook when reading a policy:
- Policy Exclusions and Limitations/Restrictions: When you buy an insurance policy, it’s easy to focus on what is covered and miss important information about the exclusions, limitations, or restrictions. For example, some health insurance policies might exclude pre-existing conditions.
- Waiting Periods: Insurance policies often have waiting periods during which you are not covered/paid even though you’ve started paying premiums. Waiting periods are especially common in disability insurance. It’s essential to know how long this period is to better plan your disability period.
- Definitions: Consumers sometimes make incorrect assumptions about what the terms mean in their policies. Review the “Definitions” sections before you incur any expense you think should be reimbursed by your insurer. Besides the main “Definitions” section, there may also be specific definitions within the policy’s descriptions of each type of coverage.
- Updating your address: As the policy owner, you must inform the insurance company of any change to your mailing address. It is also helpful to provide the insurer with your email address as so much of modern business communications are performed by email rather than by Canada Post. Not updating basic personal information like your address can have severe consequences on the outcome of a claim or when it is time for renewal of the policy and there is a change in the premium amount.
What to do if you have a life or health insurance complaint?
Disputes between consumers and insurers do happen. If you disagree with your insurance company’s decision about your claim, you can ask them to take another look. Every insurer in Canada is required to provide consumers with a process to deal with complaints.
And if you are still not happy at the end of your insurer’s complaints process, OLHI is here to help. You can submit your complaint to OLHI for a free, fast, independent and impartial review. Learn how the process works here.
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