DISCOVERED: Insurance policies cancelling out one another!
Financial Advice

DISCOVERED: Insurance policies cancelling out one another!

Are you sure you can claim on all your insurance policies?

With the Royal Commission making headlines again due to the release of the Interim report, we felt it topical to discuss some of the major issues. The Royal Commission (RC) certainly isn’t boosting consumer confidence when it comes to insurance claims. The insurance industry was the last under fire and raised serious concerns amongst consumers.

Unfortunately, Health Insurance and Personal Insurance policies (i.e. Life, Permanent Disablement and Income Protection) can be confusing to understand at the best of times. This makes it harder to decipher between good and bad policies.

The RC raised the alarm when it discovered instances where people held multiple life cover policies and were not aware that one policy cancelled out their other policy. We wanted to explain a bit more about how this works and who might be affected.


Aaron has two superannuation accounts (which quite often happens if you have multiple employers) and both superannuation accounts hold Life cover. If the member was to pass away, his family may potentially only be eligible to claim on one policy and not both. This will depend on the terms of each of the policies.

This can have significant repercussions. Aaron may have thought he would receive a payout from both policies which would be enough to cover major expenses, like household debt. In addition, he has been paying premiums for two policies his whole life, but his estate was only ever going to receive the benefit of one policy.

How can I be sure?

It’s important to point out that there are many different types of insurance policies. Not all will cancel each other out, but in many cases default superannuation policies can be harder than retail policies to claim on. To ensure you’re not paying for insurance that you’re never going to be able to claim, it is well worth your while to speak to an insurance expert. They can provide you with peace of mind and ensure that your cover matches your personal needs.

The RC is far from over, with the next phase set to make recommendations based on the findings so far.

So we anticipate there is plenty more to come …

To read the full RC Interim Report click here.