When You Need to Claim: A Practical Guide to Insurance Claims and Managing Life's Risks
- Merlin Team
- Apr 23
- 6 min read
What to do when the unexpected happens — and how to set yourself up for success before it does.
Nobody takes out insurance expecting to use it. But that's precisely the point — it's there when the unexpected hits. Whether it's a serious illness, an injury that keeps you off work, or the loss of a loved one, the last thing you want is to be navigating a complex claims process when you're already under pressure.
The good news? A smooth insurance claim isn't just about luck. It comes down to preparation, understanding your policy, and knowing what to expect at each step. In this guide, we walk you through how to make a successful claim — and the risk management habits that help you stay protected long before any claim is needed.
The Australian claims picture: by the numbers
Despite occasional media headlines about declined claims, the Australian life insurance industry pays out the overwhelming majority of claims it receives. The numbers tell an encouraging story.
In the 2023–24 financial year, Australian life insurers paid out over $14 billion in claims — the vast majority of which were paid without dispute. Being informed makes all the difference. Over the 2016–2021 period, between 92% and 94% of all Australian life insurance claims were paid. For life cover and income protection, acceptance rates are typically higher than for TPD and trauma — which reflects the more complex definitions involved in those products.
Source: Source: APRA/ASIC Life Insurance Claims and Disputes Statistics (1)
96.1%
Life insurance claims accepted in 2024 — industry average
Source: APRA/ASIC Claims Statistics, 2024 (1)
1.4%
Of all AFCA financial disputes were life insurance-related in 2023/24
Source: AFCA Annual Review, 2023/24 (2)
31%
Of Australians hold income protection insurance
Source: Rice Warner / TNS-IFSA research (3)
Know your cover before you need it
One of the most common reasons claims are delayed — or declined — is a mismatch between what a policyholder expects and what their policy actually covers. Take time now, while everything is calm, to review your cover.
Key questions to ask yourself:
Do you have life cover, TPD, income protection, and/or trauma insurance?
Are your benefit amounts still appropriate for your current income and debts?
Are there any policy exclusions you may have forgotten about?
Is your policy held inside super, or directly with an insurer?
Who are your nominated beneficiaries — and are they up to date?
If you're unsure about any of these, now is a great time to book a free insurance checkup with the Merlin team.
The most common types of personal insurance claims
Understanding what type of claim you may need to make helps you prepare the right documentation. According to APRA's biannual claims data (1), TPD and trauma claims involve more complex definitions and tend to take longer to resolve than life or income protection claims.
Cover type | What it pays for | Typical timeframe | Common complexity |
Life cover | A lump sum to your beneficiaries on death | 4–8 weeks | Low |
Income protection | Monthly income if unable to work due to illness or injury | 4–12 weeks to first payment | Medium |
TPD insurance | Lump sum if totally and permanently disabled | 3–9 months | Higher |
Trauma / critical illness | Lump sum on diagnosis of a specified condition | 4–8 weeks | Medium |
What are the odds? Don't underestimate life's risks
Understand the likelihood death, crtitical Illness & severe disability before retirement
Step-by-step: how to make a claim
A little structure goes a long way. Here's a straightforward process to follow if you or a family member needs to lodge a claim.
Notify your insurer or adviser as soon as possible
Most policies require you to notify the insurer within a reasonable time. Contact your financial adviser first if you have one — they can lodge on your behalf and help manage communications.
Gather your documentation
Commonly required: medical reports, treating doctor's statements, proof of income, your policy schedule, and identification documents. The more organised you are, the faster the process moves.
Complete the claim forms accurately
Answer every question honestly and completely. Non-disclosure — even unintentional — can jeopardise a claim. If you're uncertain about any answer, ask your adviser before submitting.
Stay in contact throughout the assessment
Insurers may request additional information or an independent medical examination. Responding promptly keeps things moving. Keep copies of everything you send.
Understand the outcome and your rights
If your claim is approved, review the settlement carefully. If it's declined or reduced, you have the right to dispute the decision — first internally with the insurer, then through AFCA (Australian Financial Complaints Authority).
Risk management: protecting yourself before a claim happens
Claims are reactive. Managing life's risks is proactive. The best financial outcome is one where your cover is structured so well that — if the worst occurs — you and your family are fully protected from day one.
Review cover annually
Your life changes. A pay rise, a new mortgage, a growing family — all of these affect how much cover you need.
Disclose fully at application
Upfront honesty means your policy is enforceable when you need it most. Non-disclosure can void a claim years later.
Prioritise your health
Good health not only reduces premiums — it also means you're less likely to need to claim in the first place.
Keep records organised
Store your policy documents, medical history, and financial details somewhere your family can find them in a crisis.
A word on income protection: the most underutilised cover in Australia
Many Australians insure their car and their home without a second thought — but according to Rice Warner research, only around one in three Australians holds income protection insurance (3). Yet statistically, you are far more likely to be off work for 90 days or more due to illness or injury than you are to have your car written off.
Your ability to earn an income is your most valuable financial asset. Protecting it should be a priority, not an afterthought.
Income protection can replace up to 70% of your pre-disability income and is generally tax-deductible when held outside of superannuation. It's one of the most cost-effective risk management tools available — and one of the most valuable at claim time.
If your claim is declined: know your options
A declined claim is not the end of the road. AFCA — Australia's free external dispute resolution body for financial complaints — handled 104,861 financial services disputes in 2023/24, of which only 1,449 (1.4%) related to life insurance products including TPD, trauma, and income protection (2). That means most disputes are resolved before escalation — but if yours isn't, here's what to do:
Request a written explanation of the decision
Ask your financial adviser to review and challenge the insurer's reasoning
Lodge an internal dispute with the insurer's complaints team
Escalate to AFCA (afca.org.au) if the internal resolution is unsatisfactory — this is free for consumers
Having an adviser in your corner makes a significant difference during this process. Advisers who specialise in insurance claims can advocate on your behalf and interpret the policy language that often trips up claimants going it alone.
Final thoughts
Insurance claims are stressful by nature — they happen at the worst possible times. But they don't have to be complicated. With the right cover in place, good documentation habits, and an adviser who understands your situation, you can navigate a claim with confidence.
More importantly, the best version of your insurance strategy is one that reduces risk so well you rarely need to claim at all. Review your cover today. Your future self will thank you.
Not sure if your cover is claims-ready?
Book a free 30-minute insurance checkup with the Merlin team — no obligation, just clarity.
Sources
APRA & ASIC, Life Insurance Claims and Disputes Statistics, published biannually (latest data: December 2024). Covers 16–17 Australian life insurers writing direct business.
AFCA, Annual Review 2023/24. AFCA handled 104,861 financial services disputes; 1,449 (1.4%) related to life insurance including TPD, trauma and income protection.
Rice Warner / TNS-IFSA, Investigating Income Protection Insurance in Australia. Reported that approximately 31% of Australians hold income protection cover, compared to 83% who hold car insurance.
AFCA, Income Protection Benefits in Superannuation. Guidance on claim documentation requirements and the dispute resolution process.
ASIC MoneySmart, Income Protection Insurance. Information on benefit levels and tax deductibility.
General advice warning: The information on this page is general in nature and does not take into account your personal objectives, financial situation, or needs. Statistics cited are sourced from publicly available regulatory data and third-party research; accuracy may vary over time. Before acting on this information, consider seeking advice from a licensed financial adviser. Merlin Financial Services Pty Ltd (Corporate AR No. 1315582) is an Authorised Representative of Finchley & Kent Pty Ltd (AFSL No. 555169).
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