Filing an insurance claim can feel like a gamble you didn’t sign up for. In 2025, the Australian Financial Complaints Authority (AFCA) received over 111,000 complaints about financial services, a 14% jump from the year before, with denial of claim complaints alone rising 32% to 6,362 cases. That means thousands of Australians each year are told no, often over a technicality they never saw coming.
Disclosure: Some links on this page are affiliate links. If you make a purchase through them, Britwealth may earn a commission at no extra cost to you. We only include products and services that are relevant to the topic.
This article is general information only and does not constitute professional advice. For your specific situation, consult a qualified professional.
Most claims do get paid — 97% of life insurance claims, for instance. But the 3% that don’t often fail because of things that could have been avoided: a missed disclosure, a misunderstood policy definition, or a procedural slip. The difference between a smooth payout and a drawn-out dispute often comes down to what you do before you ever need to claim. Here’s what you actually need to know.
What Makes a Claim Go Smoothly — and What Trips It Up
One term you’ll see in every policy document is Product Disclosure Statement — the PDS. It’s the legal document that sets out what’s covered, what’s excluded, and what you must do to make a claim.
What I tend to notice is that most people read the PDS once when they buy the policy and never look at it again. That’s a mistake. The definitions that matter — what counts as total and permanent disability, what qualifies as a trauma event, what timeframes apply for lodging a claim — are all in there, and they’re not always what you’d expect.
Claim Approval Rates, Payouts, and Timelines by Policy Type
Not all insurance claims are created equal. Life insurance pays out quickly and at high rates. Total and permanent disability (TPD) claims take over seven months on average because they require two medical professionals to confirm you can’t return to work. Income protection claims can be faster if you have solid medical evidence, but mental health conditions now account for nearly a third of income protection claims, and those can face extra scrutiny.
→ Scroll right to see all columns
| Policy Type | Average Payout (Super) | Average Payout (Advised) | Average Processing Time |
|---|---|---|---|
| Life Insurance | $134,000 | $510,000 | ~1.5 months |
| TPD | Lower (not specified) | Higher (not specified) | ~7.3 months |
| Disability Insurance | $145,000 | $664,000 | Varies |
| Trauma Insurance | $0 (most super funds don’t offer) | $258,000 | ~1.5 months |
Cancer alone drives 63% of trauma claims and 33% of life claims. Accidents account for 52% of income protection claims. Mental health conditions make up 25% of TPD claims. These aren’t rare events — they’re the main reasons people claim. If your policy doesn’t cover the specific condition or definition that applies to your situation, you could be left with nothing.
That 97% approval rate for life insurance is reassuring, but it doesn’t tell the whole story. The 3% that fail often do so because of pre-existing conditions that weren’t disclosed, or because the cause of death fell outside the policy’s terms. For TPD and income protection, approval rates are lower and processing times longer — partly because the definitions are stricter and the evidence requirements more demanding.
Where Claims Go Wrong — and How to Fix It
Non-disclosure catches up with you years later
The most common reason claims are denied is that something wasn’t disclosed at application or renewal. Under the Insurance Contracts Act 1984, you have a duty to answer every question honestly. A doctor’s visit you forgot about, a test result you thought was fine, a family history you didn’t mention — any of these can be grounds for the insurer to void the policy. What I’d do: before you ever need to claim, request a copy of your original application and check every answer. If you spot an error, contact the insurer immediately to correct it. The earlier you fix it, the less likely it is to cause problems later.
Policy definitions don’t match your condition
TPD policies require you to be unable to work in your own occupation or any occupation, depending on the policy. Trauma policies list specific medical events — heart attack, stroke, certain cancers — and if your condition isn’t on that list, it’s not covered. Mental health claims for income protection can be rejected if the policy defines disability strictly in physical terms. The fix: read the definitions section of your PDS now, not when you’re sick or injured. If the definitions don’t match your circumstances, consider switching policies while you’re still healthy.
Procedural mistakes are the easiest to avoid
Late lodgement is a top complaint category — 9,274 complaints about delay in claim handling were made to AFCA in 2025 alone. Other common procedural errors include not filing a police report for a motor vehicle accident, getting repairs done before the insurer approves them, and throwing away damaged items before an assessor can inspect them. The PDS will tell you exactly what to do and by when. Follow it like a checklist.
- Read the claims section of your PDS now and note all timeframes
- Keep a copy of your policy documents somewhere you can access easily
- Report any incident to your insurer as soon as possible — don’t wait
- Get a police report for any motor vehicle accident, even a minor one
- Don’t authorise repairs or dispose of damaged items until the insurer says you can
- Keep receipts, photos, and written records of everything related to the incident
Underinsurance leaves you short even when the claim is approved
Construction cost inflation has pushed rebuild costs well above what many home building policies cover. If your sum insured hasn’t been updated in a few years, you could be underinsured by tens of thousands of dollars. The insurer will pay up to the sum insured — anything beyond that is your problem. Check your sum insured against current rebuild costs at least once a year. If you need to increase it, you can usually do so at renewal without a new medical or property assessment.
How to Navigate the Claims Process from Start to Finish
What to do immediately after an incident
The first 24 hours matter more than most people realise. For a motor vehicle accident, call the police if anyone is injured or if the other driver leaves the scene. Take photos of the damage, the location, and any other vehicles involved. Exchange details with the other driver. Then call your insurer — most have a 24-hour claims line. For a health or disability event, see a doctor as soon as possible and get a written record of your diagnosis and treatment plan. That medical evidence will be the foundation of your claim.
How to lodge a claim — step by step
Every insurer has a slightly different process, but the general steps are the same. First, contact your insurer by phone or through their online portal. They’ll give you a claim number and tell you what documents they need. For a life or trauma claim, you’ll typically need a claim form signed by you or your beneficiary, medical reports from your treating doctor, and proof of identity. For a TPD claim, you’ll need two separate medical reports confirming your condition is permanent. For income protection, you’ll need a doctor’s certificate and evidence of your income. Send everything in one package if possible, and keep copies of everything you submit.
What happens after you lodge
The insurer will assign a claims assessor who reviews your documents, contacts your doctors if needed, and decides whether the claim meets the policy definitions. For straightforward life and trauma claims, this usually takes about six weeks. TPD claims take longer because the assessor needs to confirm the permanency of your condition — that’s why the average is 7.3 months. Income protection claims can be faster if your medical evidence is clear and complete. During this time, the assessor may ask for additional information. Respond promptly — delays on your end slow everything down.
Upcoming changes and what they mean for you
The insurance industry is facing ongoing pressure around claims handling delays. AFCA data shows delay in claim handling was the top complaint category in 2025, with 9,274 complaints. The regulator is pushing insurers to improve response times and transparency. For policyholders, this means you should expect clearer communication about timelines, but it also means you need to be proactive. If you haven’t heard anything for two weeks after lodging, call and ask for an update. If the insurer misses a deadline they’ve given you, that’s a legitimate complaint you can take to AFCA.
Frequently Asked Questions
Can I switch insurers while a claim is pending? ▾
What if my claim is denied but I think the decision is wrong? ▾
Does mental health cover apply to income protection policies? ▾
How long do I have to lodge a claim after an incident? ▾
Can I claim on both my super insurance and a personal policy? ▾
What happens if I’m partially disabled — can I still claim income protection? ▾
The One Thing That Changes Everything at Claim Time
The difference between a claim that pays out in six weeks and one that drags on for months often comes down to one thing: how well you understood your policy before you needed it. The PDS isn’t just paperwork — it’s the rulebook the insurer will use to decide your claim. Every exclusion, every definition, every deadline is in there. If you haven’t read it since you bought the policy, now is the time. And if the definitions don’t match what you thought you were covered for, you still have time to fix that while you’re healthy.
Remember: this article is general information only. For advice on your specific situation, speak to a qualified professional.
If this was useful, you might also want to read Understanding Chronic Illness Coverage in Australian Insurance.
Sources and Further Reading
The Ultimate Guide to Comparing Health Insurance Policies in Australia Without the Headache — A practical walkthrough for comparing policies side by side, with a focus on what actually matters at claim time.
Skye.com.au (2024). Claims Uncovered for Aussies. 🔗
Finance Directory (2025). Insurance Claim Denied? Fight Back. 🔗
