As the cost of living continues to rise, Australians are always on the lookout for ways to ease the financial burden. For many, an unexpected cash boost could be a game-changer, and that’s precisely what’s on offer for those who may have been mis-sold ‘junk insurance’ in the past.
The Australian Financial Complaints Authority (AFCA) initially set the deadline for complaints over these policies on February 4 and has now extended it to June 30, giving Australians a renewed chance to reclaim their money.
What exactly is ‘junk insurance’? For years, Australians taking out credit cards, personal loans, and mortgages were often persuaded to add on insurance products that were supposed to protect their credit.
However, the catch was that these insurance policies were optional, and many consumers were not informed of this fact. The premiums for these insurances were bundled into the loan amounts, leading to significantly higher interest payments and extended loan periods, sometimes by up to a third longer than necessary.
The issue of junk insurance was brought to light during a Royal Commission, which led to the practice being officially outlawed. But for those who were affected, the scars remain, often in the form of financial strain and prolonged debt.
Take the case of pensioner Donna, who took out a personal loan with NAB about 17 years ago. She believed the insurance was a legitimate part of her loan, only to discover through the services of Claimo—a company that investigates these policies—that she was entitled to compensation. Donna’s astonishment was palpable when she received a refund of $11,000, a sum that has made a significant difference to her life.
Donna’s story is not unique. Claimo co-founder Nikola Araouzou shared that the largest refund they’ve secured for a client was a staggering $144,000. These refunds can be life-altering, as Victorian resident Karen Wright found out when she received nearly $15,000 back for junk insurance attached to three personal loans.
The impact of reclaiming these funds can be profound. Teena and her husband, Troy, from NSW, were puzzled when their home loan balance wasn’t decreasing despite regular payments. After challenging the junk insurance they had been sold, they received a refund of $111,159, which they plan to put straight onto their mortgage, potentially saving them years of payments.
With the deadline to apply for a refund fast approaching, AFCA is urging Australians to check their past loans and credit agreements for any signs of junk insurance, typically listed as consumer credit insurance, mortgage protection insurance, or credit card insurance. If you find such charges and believe you were mis-sold these products before July 2019, now is the time to act.
You can approach your lender directly to investigate any potential junk insurance, or you can enlist the help of companies like Claimo. However, be mindful that services like Claimo may charge a fee for their assistance, up to 30% of your payout.
A recent poll by Yahoo Finance revealed that 60% of over 4,400 readers weren’t sure if they had ever signed up for junk insurance. If you’re in doubt, it’s certainly worth investigating, as you could potentially reclaim tens of thousands of dollars.
We encourage our members to take advantage of this opportunity to review their financial history and potentially reclaim what is rightfully theirs. Remember, the deadline is June 30, so don’t delay—this could be your chance to secure a significant cash boost that could make all the difference in your golden years.
Have you or someone you know been affected by junk insurance? Have you applied for a refund, or are you planning to do so? Share your experiences and thoughts in the comments below.
Also read: Claim your share of bank payouts before it’s too late: You could be owed up to $144,000!
