The provision of advice from financial planners during life insurance claims should be part of an holistic advice model but has been largely ignored, leading to risks for both the planner and client.
Integrity Resolutions principal Col Fullagar said planners were not required to have formal qualifications or processes on how to provide advice at the time of a claim and as a result don't provide these services – leaving the client wholly in the hands of an insurer at the time of a claim.
"The sobering truth is that whilst sound financial advice is critically important and acknowledged as such, sound advice at the time of a claim is arguably more important and yet, in relative terms, it has been largely ignored."
Fullagar stated that financial planners need to provide advice because insurance claims were first processed via claims forms and processes that were generic and required an adviser to help a client provide the right type and amount of information to avoid misunderstandings or delays.
He said forms were also inconsistent with their wording compared to the policy documents. They served the insurer's agenda and purpose, often causing the insured to leave out vital information.
He also stated that if planners saw claims advice as part of the holistic advice process they could provide that advice within a framework that was similar for the other areas of advice.
According to Fullagar, the claims advice process would have a fact-finding process during which material information is obtained; an analysis during which information obtained is reviewed and assessed; research involving the obtaining of other relevant information; and the provision of a recommendation which, if accepted, is implemented, monitored and reviewed.
"This is not about making an adviser's life more difficult and more weighted down with processes; it is about making the adviser's life safer, their business more valuable and the adviser value-add clearer to the client," Fullagar said.
He also said a claims advice process would make the claim outcome "more assured and appropriate via a timely, predictable, understood and respectful claim process leading to either the receipt of a benefit payment or an appreciation of why payment cannot be made".
