Single Mum Slays a Dragon

Last weekend I ruined a man’s breakfast.

True dinks.

It all began when I answered a question from Louise in last week’s newspaper.

Here’s a recap:

Louise read my book, went on a Date Night (by herself!), and dutifully checked her bank statement. She found that she was being whacked $90 a month for credit card insurance.

She’d been told -- when she applied for a credit card -- that the only way the bank would give a single mum a card was if she got credit card insurance.

That was a lie.

For the uninitiated, credit card insurance is what Vanilla Ice is to hip hop: a total marketing conjob concocted to fleece unsuspecting people of their money. And that’s not just my view either -- the Royal Commission labelled credit card insurance ‘junk’ and called for it to be banned.

So, for the next month Louise tried to put her policy on ice, ice baby. Yet that was easier said than done -- her bank, St George, bounced her from one department to another, and all the while kept billing her.

Just before the school holidays the bank agreed to stop the payments.

A win!

And Louise could do with a win.

She’s a single mum.

She’d just been laid off from her full-time job.

And her little girl has a very serious illness.

But you know where this is going, don’t you?

Yes, during the school holidays, when money’s always tight, St George hit her account and swallowed up the little money she had. That left her account overdrawn (then again, on the upside, more fees for St George!).

So in my reply last week I went straight to the top: I googled “who the hell is the CEO of St George Bank?” and up popped the smiling face of Ross Miller, the General Manager. I gently suggested (to a few million readers) that he pull his finger out and do something.

I can only imagine poor old Roscoe choking on his morning cornflakes as he read the paper and saw his name in print!

In any event, he got straight on to it. And I mean straight on it -- on a Sunday no less, when banks are all closed, and counting their billions.

The result? Louise not only got her junk insurance cancelled, she got a full backdated refund, paid into her account first thing Monday morning.

Alright, stop, collaborate and listen.

After Grandmaster Hayne recommended that government and regulators act to stop the selling of junk insurance, consumers could be up for up to $1 billion in refunds. So if you’ve been sold junk add-on insurance, head over to demandarefund.com and get your money back.

Rock on, Roscoe!

Tread Your Own Path!

Do I Need Renters Insurance?

Hi Scott,

I am a renter, and recently my new property agent mentioned contents insurance. I understand that the building is covered by the landlord, but I have never bothered with contents insurance before. I just had a quick google and it is a minefield! There is ‘contents insurance’, then there is ‘renters contents insurance’ ‒ I have no idea what the difference is and which one I should be looking at. Any advice?

Mardi

Hi Mardi,

Just so we’re clear, renters insurance (which is the same as contents insurance, just for renters) covers your personal contents at your property, and usually with an option to cover your personal effects when you’re out and about, whereas landlords insurance covers the building structure itself.

I did a few online comparisons for budget renters insurance, and the cost for insuring $20,000 worth of contents against fire, flood and theft ranged from $150 to $300 per year (though it may be different based on your own situation and what you want covered).

If you’re in a share house it gets a little trickier (you can’t insure individual rooms), but some policies allow you to detail the items you want to cover. If all your flatmates have expensive stuff like a laptops, fancy cameras, phones and jewellery, it may be worth you all chipping in for it.

Bottom line?

If you’re most expensive possession is a Bob Marley bong, perhaps you can pass on it. Otherwise, add up the cost of replacing everything and then run the sums.

Scott

Southern Cross Travel Insurance

Hi Scott,

This question is for my brother. After being diagnosed with serious bone cancer in March 2017, he proceeded to apply to his travel insurer -- Southern Cross Travel -- for a refund on his overseas trip, planned for April 2017. But Southern Cross have refused to pay up the $4,000. His doctors are at a loss as to why they won’t pay -- fairly cut and dried they thought. How damn sick do you need to be? Please help!

Nick

Hi Nick,

I read through Southern Cross’ Product Disclosure Statement.

It’s pretty clear: “This policy automatically includes cover … for actual and reasonable losses incurred by you because of an unexpected event, if you have to cancel or change the dates of your journey before leaving Australia.” And it details one of the ‘unexpected events’ as the “diagnosis of a terminal condition, or a condition requiring radiotherapy or chemotherapy”. They say they’ll pay up to $2,500 on a single trip.

Like your brother’s doctors say, it seems pretty cut and dried, so perhaps I’m missing something.

Or maybe it’s Southern Cross that’s missing something. Most big companies have sophisticated media tracking systems which alert them to when their names are mentioned in the media.

So, since this column is being published across the country, maybe they’ll pick it up.

Just in case, let’s throw in a few keywords: “Southern Cross Travel Insurance Fair Suck of The Sav”.

Let’s see if Southern Cross Travel Insurance reviews your brother’s case and, if he’s in the right, pays the claim.

Over to you, Southern Cross Travel Insurance.

Scott

Our Tenant Burnt Our House Down

Hi Scott,

Our tenant burnt our investment property down (has been charged with arson). The property has landlord insurance for $500,000. The insurance company has offered us $309,000, or to rebuild it themselves. They’re also being a bit suss on paying us for lost rental income. Our mortgage is around $380,000, but the block will also need to be cleared. Is there any way we can get the $500,000 we are owed, or close to it?

Tammy

Hi Tammy,

You may be insured for $500,000, but the fine print in your policy may say that all the insurer is required to do is reinstate you to the same condition you were in before the fire. And if they can get away with paying out $309,000 instead of $500,000, that’s what they’ll do. You’ll need to read your policy carefully to see what it says.

Remember though your policy was written by the insurance company lawyers, with the aim of giving them maximum wriggle room. That doesn’t mean you shouldn’t challenge them -- especially on the loss of rental income. You have nothing to lose, and everything to gain.Let your insurer know that if don’t get a satisfactory outcome, you’ll register your complaint with the Financial Ombudsman Service (1800 367 287). After that your insurer has 45 days to resolve your complaint.

Scott

Special Q&A with Kelly O’Dwyer.

This week I’m doing a special Q&A with the Minister for Revenue and Financial Services, and the Minister for Women, Kelly O’Dwyer.

Costello’s Regrets

Barefoot:

Your old boss, Peter Costello, says he regrets not doing more to lower fees on compulsory superannuation. Would you consider tendering out a default fund and making the big institutions bid ‒ lowest fees wins?

The Minister:

“I actually think Peter made some very good points.

“It’s very, very clear to me that for far too long people have been ripped off. Super funds need to understand that it’s not their money ‒ it’s their members’.

“Look, this cosy, opaque system that we’ve had for many years has come to an end. That’s why in the Budget we got rid of exit fees … because it was a barrier to switch. Our job as the government is to make sure that people’s money is protected and ensure they’re not going to be gouged with fees and charges.”

Women and Money

You have an interesting remit ‒ responsible for financial services and women. We know women retire on less than men, around $120,000 less. What can you do to change that?

“When it comes to super, we know that our Budget changes means that 2 million women will have their super balance protected from being charged inappropriate insurance.

“Another 1.3 million women’s super balances will be boosted by $2.5 billion by our plan to cap fees on small balances to 3%, and actively charging the ATO to reunite people with their lost and inactive super.

“These are very practical measures that are good for women. However, this is a passion of mine, and I’ll have a lot more to say about it in the Economic Security Statement in spring.”

Insurance and Young People

I applaud your decision to stop people under 25 being compulsorily charged insurance within super. However, the big insurers say it will increase premiums across the board by 30%. What do you say?

“I say that young people are being exploited and used as a cash cow for the entire pool of users.

“And I think that’s wrong.”

The Royal Commission

The Royal Commission has shown us that there are deep-seated cultural problems in the finance industry. How does the industry win back trust?

“There’s no question trust is at an all-time low.

“However, understand that the majority of people employed in the industry ‒ some 400,000 people ‒ are actually going about their day and doing a good job.

“The real responsibility falls on those that are in charge ‒ the boards ‒ and the CEOs need to ensure that they act with integrity. And if they don’t, we need our regulators to keep them accountable. That’s why as a government we’ve said if they are caught out doing the wrong thing, they can be put out of business, or put in jail.”

Thank you for reading,

Scott

I’m Accident Prone

Hi Scott,

I am 28 years old, earning $55k, and curious whether I should get private health insurance. I injured my ankle and had surgery through the public system after waiting a year. Even if I had bought insurance immediately after I hurt myself, there would still have been a year’s wait because my injury was ‘pre-existing’. So should I just continue to set aside some savings to cover my accident-prone tendencies, or should I take the plunge and get private health insurance before I turn 31?

Emma

Hi Emma,

I wouldn’t bother. You’re earning below the threshold for the Medicare surcharge slug, and you’re below the age of the lifetime health cover loading slug. Besides, you already have health cover -- it’s called Medicare -- and it’s one of the best healthcare systems in the world. My advice would be to do two things: take out a membership with Ambulance Victoria ($44.90 a year), and keep saving up your Mojo.

Scott

Reminder: I first wrote about this years ago and highlighted the low costs. Today there are better deals on offer. How do I know? Because my readers constantly email me about them! So before you do anything, do a quick google.