When people think about select a policy for Life Insurance, Trauma Insurance or Income Protection a few points usually spring to mind. These are: The level of cover required, the price of the cover and how the company is.

However the most important consideration is usually overlooked: the policy definitions. What are definitions? Definitions are the clauses put on the insurance policy by the insurer to outline at what point a claim can be made. In the case of Life insurance these usually refer to the severity of an illness or the level of incapacity.

While the illnesses covered by life insurance are fairly consistent across the insurance market the definitions applied by each company vary greatly. A good example of this can be found in the definition for cancer, more specifically carcinoma in situ or lumps in the breast, used by two of the major players in the Australian market.

The first company will pay a claim for Carcinoma in Situ only if it results in the removal or the entire breast, commonly know as a Breastectomy, specifically in an effort to arrest the spread of the cancer and be considered necessary and appropriate treatment.

The second company will pay a claim for Carcinoma in Situ upon diagnosis of a suitable specialist and removal of the Carcinoma, often referred to as a Lumpectomy.

As you can see the definition used by the second company is much easier for a potential claimant to satisfy and therefore a claim is easier to make.

So when you are considering who to insure with, make sure you consider not only the type of cover, amount of cover and the premium but also the definitions on the policy. These could make the difference between being able to survive should something happen to you.

Contact PIG or your insurance advisor for more information on Policy definitions.