Insurance policy didn’t serve purpose, customer says

Beatrice believed the policy would cover her loan if for any reason she couldn’t make the repayments. She’d had her share of unexpected life events in the preceding years. Her husband had died the year before, and she lost the house because she couldn’t afford the mortgage payments by herself.

“I pretty much started all over from scratch at the age of 46,” she said.

She thought the policy would protect her from any future financial shocks.

In 2021, Beatrice’s doctor declared her unfit for work due to high levels of stress. Financially stretched, Beatrice went to a financial mentor who pointed out she had the CCI policy.

Beatrice made a claim on the policy, but Janssen declined it. The policy excluded any “mental fatigue or burnout, stress-related illness or depression”.

Exclusions, in particular mental health exclusions, are standard insurance practice. It’s not a practice Consumer NZ agrees with, and we believe such exclusions haven’t kept up with changing medical and cultural attitudes to mental wellness.

Beatrice complained to the Insurance and Financial Services Ombudsman (IFSO), but it didn’t change the outcome because of the mental health exclusion.

“The insurance product did not serve its purpose,” Beatrice said.

A spokesperson for Oxford Finance said it has a robust process for assessing the suitability of insurance products for its customers. Part of this process includes full disclosure of the benefits and exclusions of the policy. It also offers the borrower the chance to seek independent advice.

Beatrice is now behind in her loan repayments to Oxford. She’s had to make a KiwiSaver hardship withdrawal to pay off some of the loan, and is working with a budgeter to work out a plan to repay the rest.

The finance company “is working closely with the borrower and her budget adviser to support her through this and to ensure she is repaying her loan in line with what she can afford”, an Oxford Finance spokesperson said.

“I’m not trying to run away from my debts,” Beatrice said. However, she is very disappointed she was sold what she considers a worthless insurance policy.

*Name changed for privacy reasons.