Claims uncovered for Aussies 

life insurance
Written By Jam Villasanta

Let’s be real: insurance claims aren’t exactly pub chat material. But when something major happens, your claim is the difference between bills piling up and actually being able to breathe. And for young Australians, knowing how insurance claims really work is more important than most people think. 

A lot of us assume insurers just say “nah” when it’s time to pay out. But the stats tell a very different story. 

“We’re looking at life cover claims acceptance rate of about 97%.”
— Matt, Skye Wealth Adviser

Life insurance claims get paid 97% of the time, according to 2024 data from the Australian Prudential Regulation Authority (APRA, 2024). Let’s unpack what Aussies claim for, how insurance payouts work, and why it’s worth knowing. 

What people actually claim for 

Forget the “I’ll never need it, I’m young and healthy” argument. Matt shared some insider insights from Skye’s Deep Dive: 

  • Cancer is the biggest driver—63% of trauma claims and 33% of life claims. 

  • Mental health conditions account for 25% of TPD claims. 

  • Accidents (from workplace injuries to weekend wipe-outs) make up 52% of income protection claims. 

That’s not a doomsday list—it’s just reality. And it shows insurance claims aren’t only for the “old and unwell.” 

“Cancer No. 1 at 63% of all trauma claims… mental and behavioural at 24.86 [for disability insurance]… accidents and injuries at 52% [for income protection].”
— Matt, Skye Wealth Adviser

Backed by public data, we can see: 

  • Cancer remains a leading cause of claim payouts—APRA and the FSC-KPMG data cite it as the cause in around 58% of life-related claims Financial Services Council. 

  • Mental health has surged, making up about 25% of TPD claims Financial Services Council, and according to TAL, now accounts for nearly a third of income protection claims TAL. 

Cancer dominates AIA Insurance claims accounting for a third of total insurance payouts in 2023, with breast and skin cancers representing over half of cancer claims (Source: Interest.co) 

Do insurance claims actually get paid?  

This is the big one. We’ve all heard someone swear insurers “never pay.” The data says otherwise: 

Most insurance claims get paid, but the fine print can trip you up. Matt explained that claims might be denied if they don’t meet specific policy definitions—like a condition not covered under trauma insurance—or if you skipped mentioning a health issue when signing up. A colleague’s client got knocked back because he didn’t disclose an old ankle injury. Be honest upfront to secure your insurance payouts. 

“There’s good reasons why 100% of all claims aren’t paid out… like non disclosure at time of application or the claim just didn’t meet the definition.”
— Matt, Skye Wealth Adviser

Super funds vs. going through an adviser 

A lot of young Aussies just leave their insurance inside super because it feels easier. But when it comes to claims, the gap in outcomes is massive. In 2024, life insurance claims through super averaged $134,000, while advised policies paid $510,000. Disability insurance claims averaged $145,000 through super but $664,000 with an adviser. Trauma insurance? Most super funds don’t offer it, leaving you with $0, while advised trauma claims averaged $258,000. 

  • Average life claim through super: $134,000 

  • Average life claim through an adviser: $510,000 

It’s not about piling on cover—it’s about having enough when it counts. Super policies often have default, lower-level cover with fewer health questions, which can mean fewer exclusions but less tailored protection. Advised policies dig into your health and job for better insurance payouts. 

“Average claim through super fund for life cover, hundred and thirty four thousand… through an advisor, 500 and ten thousand.”
— Matt, Skye Wealth Adviser

💡 Stat: Advised life insurance claims average $510,000, compared to $134,000 through super (APRA, 2024).

Source: https://www.apra.gov.au/publications/life-insurance-claims-and-disputes-statistics

How long do claims take? 

Nobody wants to wait around when they’re already in crisis. Here’s the average timeframe in Australia, per 2024 APRA data: 

  • Life insurance & trauma: about 1.5 months 

  • TPD claims: around 7.3 months (because two doctors need to confirm permanency) 

  • Income protection: Often faster, especially with solid medical evidence. 

Income protection can be quicker, especially if you’ve got medical certificates showing you’re unfit for work. 

Take Ava, who earned $90,000 a year before a back injury forced her to cut back to four days a week. Her income protection claim kicked in within weeks, topping up her reduced income to keep her bills paid. (Source: Aspect Underwriting) 

Clear doctor’s notes and quick chats with your insurer can speed up insurance payouts. 

The complex side of claims 

Some claims aren’t black-and-white. TPD claims need two medical professionals to confirm you can’t go back to work. Income protection allows for partial capacity—you might still be able to work part-time, and the policy will make up the shortfall if you’re earning less than before. 

Matt gave the example of clients with chronic fatigue or back issues—conditions that don’t mean “never working again,” but do impact your income for years. Claims are built to flex with situations like that. 

“With income protection, you don’t have to be totally out of work to get support.”
— Phil, Skye Financial Adviser

Should you go to a lawyer first? 

One of the biggest myths around insurance claims is that you need to lawyer up straight away. Sure, lawyers can help with disputes—but they’ll also take a big cut of your payout. 

Most of the time, starting with your adviser or a claims advocate means less stress and more money in your pocket. Lawyers should be a last resort, not your first stop. 

What insurance covers 

Here’s the quick guide to what each insurance type does: 

  • Life insurance: Pays a lump sum to your family if you pass away, helping them stay afloat. 

  • Disability insurance: Gives a lump sum if you’re permanently unable to work due to injury or illness. 

  • Trauma insurance: Covers serious conditions like cancer or heart issues with a payout for medical or living costs. 

  • Income protection: Pays monthly if you can’t work due to injury or illness, even short-term, to cover bills. 

Each type suits different needs—whether you’re single, raising kids, or paying off a mortgage. 

How to prep for insurance claims 

Want to be ready for insurance claims? Here’s the plan: 

  1. Talk to an adviser: At Skye, we check your finances, health, and lifestyle to find the right policy. 

  2. Get pre-assessed: Worried about health? We’ll confirm if you’re insurable first. 

  3. Choose your cover: Pick life insurance, income protection, disability insurance, or trauma insurance based on your life. 

  4. Know your policy: Understand what’s covered to make claims smoother. 

Don’t rely on super alone. Tailored cover ensures insurance payouts are there when you need them. 

The takeaway 

The data shows insurers mostly do pay. The bigger question is whether you’ve got the right cover in place so that when it’s your turn to claim, you’re not left short. 

For young Aussies, that’s worth paying attention to—not because you’re expecting the worst, but because life is unpredictable. 

Resources 

Jam Villasanta
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The messy truth about mental health and insurance