How Financial Planners Should Respond When a Client's Insurance Claim Is Declined

17 September 2026·3 min read

Quick answer: Call before the client processes the decline alone. Acknowledge how hard the news is, explain the next available steps (review, internal complaint, external dispute resolution), and be honest about what you can and can't influence from here. This is a moment where presence matters more than solutions. 📈

Here's one of the hardest calls in financial planning 💖: a client's insurance claim comes back declined, often at a moment they're already going through something difficult. The instinct to want to fix it immediately is understandable, but the first job in this conversation is simply being present and honest, not solving it on the spot.

What Most Financial Planners Get Wrong

The common mistake is either over-promising (implying an appeal will likely succeed when that's genuinely uncertain) or under-communicating (letting the insurer's letter be the client's only source of information, with no call to check in). Both leave the client feeling more alone with the news than they need to be.

The Script

"I saw the outcome from [insurer], and I wanted to call rather than email. I'm really sorry — I know this isn't the news you were hoping for, especially on top of everything else.

Here's what we can look at from here: [internal review / additional information / external dispute resolution via AFCA]. I can't promise a different outcome, but I can make sure you understand every option available and help you through whichever path you'd like to take.

What would be most helpful for you right now — talking through the options today, or taking some time first?"

A financial planning practice with a strong risk advice focus: has a plain-English one-pager on the claims review and AFCA process ready to send after this call, so the client has something to refer back to once the initial shock has settled.

A solo adviser practice: schedules a genuine follow-up call a week later regardless of where the client landed on next steps, specifically to check in as a person, not just to progress the claim.

The Mechanics: What to Prepare in Advance

Know your internal review and complaints process, and have a clear, plain-English explanation of AFCA (the external dispute resolution scheme) ready before you need it — fumbling through this explanation in the moment adds to a client's stress.

💡 Don't promise an outcome you can't control: honesty about uncertainty, paired with genuine support through the process, builds more trust than false reassurance ever could.

Mistakes to Avoid

Letting the insurer's letter be the client's only communication about the decline
Over-promising on the likelihood of a successful review or appeal
Rushing to next steps before acknowledging how difficult the news is
Failing to follow up after the initial conversation

Please note: general information, not financial or legal advice — specific claims review, complaints and dispute resolution processes vary by insurer and product, so confirm current options for the client's specific policy.

Frequently asked questions

Should the planner get involved in the claims review process directly?

Often yes, as support and an advocate for gathering information — though the specific process and any formal representation depends on the client's wishes and the insurer's requirements.

What is AFCA, briefly?

The Australian Financial Complaints Authority — a free, external dispute resolution scheme clients can use if they're not satisfied with an insurer's internal review outcome.

How much detail should be shared about the reasons for decline?

As much as is accurate and available — vague reassurance without the real reasons tends to create more anxiety, not less, once the client seeks their own information.

Is it appropriate to express frustration with the insurer to the client?

A measured, honest tone ("I understand this is frustrating") is appropriate; venting personal frustration at the insurer in front of the client generally isn't helpful and can undermine confidence in the process.

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Written by

Kate, founder of Chronically Online

I help Gold Coast and Brisbane businesses grow with branding, websites and marketing that actually works.

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