You paid premiums for years — sometimes decades — exactly so this would never be a problem. Then you got sick or injured, you couldn’t work, you lodged the claim, and the insurer came back with: “We don’t accept that you meet the definition of total disability under the policy.” Or: “There was non-disclosure when you took out the policy.” Suddenly the very thing you were paying to be protected from is the thing that’s bankrupting you.
Income protection denials are among the most contested matters at AFCA, and well-prepared consumer cases are often taken more seriously than many policyholders expect.
The legal framework
Income protection is regulated under the Insurance Contracts Act 1984 (Cth) with additional rules under the Life Insurance Code of Practice (administered by the Council of Australian Life Insurers) and the Corporations Act 2001. The ASIC Regulatory Guide 271 on internal dispute resolution mandates 45-day timeframes for life-insurance complaints. AFCA’s jurisdiction extends to monetary awards up to $13,400 per month for income-protection benefits.
Common refusal reasons and how to dismantle them
- “You don’t meet ‘total disability’ / ‘own occupation’ definition.” Often the insurer’s medical reviewer disagrees with your treating doctors. You’re entitled to all medical reports relied upon. Independent medical examinations frequently overturn paper reviews.
- “Pre-existing condition / non-disclosure.” Sections 21–22 of the ICA require materiality and reliance. Non-disclosure of something the insurer didn’t ask about is not actionable.
- “You can do other work.” Only relevant for “any-occupation” cover, and even then must be realistic given training, education, and experience.
- “Your benefits offset against Centrelink / superannuation TPD.” Often misapplied; many policies don’t permit double offsetting.
- “You didn’t notify within X days.” Section 54 of the ICA generally invalidates this defence.
What the document does
A Letter of Demand identifies the policy, the claim, the precise denial basis, the legal flaw in that basis, the sum claimed (including arrears of monthly benefits), and a deadline. It formally requests every medical report, internal file note, and decision memo under the Life Code. Insurers prioritise files showing AFCA exposure.
What Claim Done delivers
Wizard takes about ten minutes. Flat $79. AI-drafted, citing the ICA, the Life Code, and AFCA jurisdiction. For complex denials needing a full structured legal response, our legal-response document is $79.
What to expect after sending
Life insurers typically respond within 30–45 days. If the denial is maintained, lodge an AFCA complaint immediately — AFCA reverses or partly reverses a substantial portion of income-protection disputes. The Letter of Demand and the disclosure you obtain become the foundation of your AFCA submission.