Medical Disclosure in Insurance Applications: Common Mistakes to Avoid

By Christopher Hall, Financial Adviser, AFSL 526688, Arrow Equities  |  Published March 2026  

Both over-disclosure and under-disclosure create problems in Australian life insurance applications. Under-disclosure risks claim denial. Over-disclosure can generate exclusions and loadings that do not reflect an actual medical risk — and may take significant effort to remove. The correct approach is to answer every question asked accurately and completely, and not to volunteer information beyond what has been specifically asked.

Medical disclosure is one of the most consequential parts of any insurance application — and one of the least understood. Most policyholders who complete applications with gaps or inaccuracies do so without any intent to mislead. The problems arise from rushed applications, misunderstood questions, and incorrect assumptions about what is and is not relevant. Understanding the most common mistakes, and the consequences of each, is the starting point for getting this right. For a broader overview of what a comprehensive policy review involves, the Insurance Premium Review Guide covers the full assessment framework.

What Is Medical Disclosure — and What Does the Law Require?

Medical disclosure is the process of providing accurate health information to an insurer when applying for life, income protection, or TPD cover. Insurers use this information to assess risk, determine whether to offer cover, and set the terms — including any exclusions or premium loadings — that will apply to the policy.

Since 2021, Australian applicants are required to take reasonable care not to make a misrepresentation to their insurer. This replaced the previous, stricter duty of disclosure. In practical terms, it means answering every question asked truthfully and in full — but does not require volunteering information the insurer has not asked about.

If a material misrepresentation is identified during a claim, the insurer may deny the claim, reduce the benefit proportionally, or void the policy entirely. It is worth noting that APRA data shows 95% of finalised life insurance claims are paid by Australian insurers (APRA Claims and Disputes Statistics, 2022) — indicating that most insurers apply a reasonable standard, including in disputed disclosure cases. However, the 5% of claims that are not paid often involve disclosure issues, and the consequences of being in that category are severe.

What Are the Most Common Medical Disclosure Mistakes?

Mental health consultations with a GP

The single most common disclosure gap identified across Arrow Equities' review experience involves mental health treatment — particularly brief, resolved episodes of anxiety or stress managed through a GP. A policyholder who consulted their GP about workplace stress and received a short course of medication several years ago may not consider this relevant to an insurance application. Insurers do. If a later claim has any mental health component, the insurer will investigate medical records, and an undisclosed GP consultation will be identified.

Controlled conditions misunderstood as non-conditions

High blood pressure managed by daily medication is still a diagnosed condition requiring disclosure. High cholesterol controlled by statins is still a diagnosed condition. A common misconception is that "it's under control so it doesn't count." The correct position is that a condition managed by medication is a disclosed condition — the medication is itself evidence of the diagnosis.

Specialist consultations where results were clear

A referral to a cardiologist that returned a clear result, a dermatology consultation, an ENT visit — these are all specialist consultations that should be disclosed if the application asks about them. The purpose of the consultation matters to the underwriter, not only the outcome. Medical billing records will reveal undisclosed specialist visits during any claim investigation.

Family medical history gaps

Questions about family medical history typically ask about conditions diagnosed in parents or siblings before age 60. Common gaps include a parent diagnosed at 62 (technically outside the window but worth disclosing if the question is broadly framed), a sibling's condition the applicant was uncertain about, or unknown paternal medical history that is recorded simply as "unknown" rather than left blank.

Physiotherapy — the most frequent grey area

Discussed in detail in the case study below, physiotherapy is the most common source of friction in the underwriting process across Arrow Equities' review experience (C. Hall, Arrow Equities, proprietary policy review data). The distinction between physiotherapy for a diagnosed musculoskeletal condition and physiotherapy for general exercise guidance or injury prevention is material — but often not reflected in how applicants answer the question.

Three Case Studies From Christopher Hall's Review Practice

Case Study 1: Over-Disclosure — A Cold That Complicated an Application

(C. Hall, Arrow Equities, proprietary policy review data)

During a phone-based underwriting assessment, a client was asked generally about their current health. The client mentioned they had taken a day off work because their child was unwell and they had felt under the weather themselves — minor symptoms, no GP visit, resolved within a day or two.

The underwriter, following standard procedure, placed the application on hold and asked the applicant to obtain a doctor's certificate confirming they had recovered and were no longer unwell before the application could proceed.

This introduced an unnecessary delay and administrative hurdle into what was, by any reasonable measure, a trivial health event. The correct approach in this situation would have been to describe the current state of health — which was good — and not to volunteer passing symptoms that had no medical relevance to the application.

The lesson is not to be dishonest. It is to understand the scope of the question being asked and to answer it accurately without elaborating beyond what is relevant.

Case Study 2: Over-Disclosure — The Physiotherapist as Risk Indicator

(C. Hall, Arrow Equities, proprietary policy review data)

Policyholders who proactively seek physiotherapy guidance for exercise form or injury prevention may inadvertently trigger full exclusions during insurance underwriting — even where no underlying condition exists.

A significant number of Australians use physiotherapists not to treat a diagnosed condition, but to improve exercise technique, manage general physical activity, or obtain professional guidance on how to work out safely. Many do so using private health cover subsidies — a sensible use of available resources.

In insurance underwriting, however, a physiotherapy consultation is frequently treated as evidence of a musculoskeletal issue. Where an application discloses physiotherapy attendance, the default underwriting response from many insurers is to apply a full exclusion for the relevant body area — back, knee, shoulder, or otherwise — regardless of the reason the physiotherapy was sought.

This places the adviser in the position of having to claw back a full exclusion that was never warranted. The process requires obtaining detailed clinical notes from the treating physiotherapist confirming that the consultations were preventive in nature and that no underlying condition was identified or treated. In Christopher Hall's experience, this advocacy is often successful — but it is time-consuming and entirely avoidable.

The correct approach is not to conceal physiotherapy attendance where it is specifically asked about. It is to describe the purpose accurately — and, ideally, to discuss with an adviser before completing the application how to frame the response correctly. (C. Hall, Arrow Equities, AFSL 526688, proprietary policy review data)

Case Study 3: Under-Disclosure — and the Insurer Pays Anyway

(C. Hall, Arrow Equities, proprietary policy review data)

A client who had understated the extent of a health condition during their original application subsequently claimed on that policy — for the same condition they had inadequately disclosed.

During the claims process, the insurer investigated the original application and identified the discrepancy between what had been disclosed and what the medical records showed. On a straightforward reading of the application, the policy may well have been denied at inception, or at minimum issued with a full exclusion for the relevant condition. The insurer had reasonable grounds to deny the claim.

The insurer paid the claim regardless — giving the policyholder the benefit of the doubt.

This outcome aligns with the broader industry data: APRA's Claims and Disputes Statistics show that 95% of finalised life insurance claims are paid by Australian insurers (APRA, 2022). Insurers are not, as commonly assumed, looking for reasons to avoid paying. In practice, Christopher Hall's review experience consistently finds that insurers apply a reasonable and often generous standard when assessing disputed claims.

The caution this case study carries is not that under-disclosure is safe — it is that the 5% of cases where claims are denied can be catastrophic, and relying on an insurer's goodwill is not a risk management strategy.

What the 30% Figure Actually Means

Approximately 30% of policies reviewed by Arrow Equities carry exclusions or loadings that warrant re-assessment (C. Hall, Arrow Equities, 500+ policy reviews). This is not a disclosure failure rate. Exclusions and loadings applied by an insurer at underwriting are known, documented policy terms — not gaps or errors. They reflect the insurer's assessment of disclosed medical information at the time the policy was issued.

What the figure highlights is that a meaningful proportion of policyholders are carrying restrictions on their cover that may no longer be appropriate. A condition that generated an exclusion at application may have since resolved. A loading applied five years ago may be reviewable in light of subsequent health history. These are not disclosure issues — they are policy review opportunities.

How to Approach Disclosure Correctly

Three principles for completing medical disclosure in an Australian insurance application:

Step 1 — Answer what is asked, accurately and completely

Read each question carefully and answer truthfully and in full. This includes conditions managed by medication, past treatment that has since resolved, and specialist consultations even where results were clear. The current legal standard — reasonable care not to mislead — requires complete answers to the questions asked.

Step 2 — Do not volunteer information beyond the question asked

There is no legal obligation to volunteer information the insurer has not asked about. Where a question asks about diagnosed conditions, answering about a passing illness shared with a sick child — without a diagnosis — goes beyond what is required and may create underwriting complications that do not reflect an actual medical risk.

Step 3 — If uncertain, ask your adviser before answering

If there is any uncertainty about whether a health event, consultation, or medication is relevant to a specific question, ask a qualified adviser before completing the application. An experienced adviser understands the underwriting implications of different answers and can help frame an accurate, appropriately scoped response — avoiding both the under-disclosure risk and the over-disclosure problem. This is particularly important for physiotherapy history and mental health consultations, the two most common sources of underwriting complications in Christopher Hall's experience.

Frequently Asked Questions

Q: What is the duty of disclosure in Australian insurance applications?

Since 2021, Australian insurance applicants are required to take reasonable care not to make a misrepresentation to their insurer. This replaced the previous stricter duty of disclosure. It means answering all questions asked truthfully and completely — including conditions managed by medication and past specialist consultations — but does not require volunteering information that has not been specifically asked for.

Q: What happens if a disclosure mistake is found at claim time?

The insurer may deny the claim, reduce the benefit proportionally, or void the policy entirely. The outcome depends on whether the non-disclosure was deliberate or inadvertent, and whether the insurer would have offered cover had the information been disclosed. APRA data shows 95% of finalised claims are paid (APRA, 2022) — but the consequences of being among the 5% can be severe and irreversible.

Q: Does physiotherapy need to be disclosed in an insurance application?

This depends on the specific question asked and the purpose of the physiotherapy. Consultations for a diagnosed condition should be disclosed. Consultations for exercise guidance or injury prevention are a grey area — the applicant should discuss with an adviser before answering to ensure the response is accurate without generating an unwarranted exclusion. (C. Hall, Arrow Equities, proprietary policy review data)

Q: What are the most common medical disclosure mistakes in Australian insurance applications?

Based on Arrow Equities' experience across 500+ policy reviews: mental health GP consultations; controlled conditions such as high blood pressure or cholesterol managed by medication; physiotherapy sessions attended for exercise guidance; specialist consultations where results were clear; and family medical history gaps. (C. Hall, Arrow Equities, proprietary policy review data)

Q: What does it mean when an insurance policy has an exclusion or loading?

An exclusion means the policy will not pay claims related to a specified condition or body part. A loading means an additional premium is charged to reflect higher assessed risk. Approximately 30% of policies reviewed by Arrow Equities carry exclusions or loadings that warrant re-assessment — in some cases the underlying condition has since resolved and the exclusion may be reviewable. (C. Hall, Arrow Equities, 500+ policy reviews)

Related Articles

• Insurance Premium Review Guide for Australian Families — the full review framework

• When to Seek Professional Insurance Advice: The Review Process — what a disclosure audit involves

• Should I Cancel My Expensive Life Insurance? — the disclosure consequences of cancelling and reapplying

• Stepped vs Level Premiums — why switching structures requires full re-underwriting

• Pre-Existing Conditions and Life Insurance — how underwriting handles known health history

For policyholders who hold policies with exclusions or loadings they believe may warrant review, or who are completing a new application and want guidance on disclosure, Christopher Hall offers a complimentary policy assessment. Appointments can be booked via the Arrow Equities bookings page.

About the Author

Christopher Hall is a financial adviser and Principal of Arrow Equities (Rose Bay Equities Pty Ltd, CAR 1304002, AFSL 526688). Christopher has conducted more than 500 life insurance policy reviews and specialises in life risk insurance advice for Australian families. He holds a Bachelor of Economics and is a specialist life risk adviser registered with ASIC. Educational Disclaimer: This content is for educational purposes only and does not constitute financial advice. Past performance is no guarantee of future results. The information, opinions and other materials appearing on the Web Site are of a general nature only and shall not be construed as advice. Arrow Equities, AFSL 526688, ABN 87 645 284 680. This general information is educational only and not financial advice, recommendation, forecast or solicitation. Rose Bay Equities accepts no responsibility for the accuracy or completeness of the information, opinions or other materials provided on or accessible through the Web Site. The Web Site has not been prepared with reference to your individual financial or personal circumstances. You should not rely on any advice in this Web Site without first seeking appropriate professional, financial and legal advice. Further, where Rose Bay Equities makes third party material available or accessible through the Web Site you acknowledge that Rose Bay Equities is a distributor and not a publisher of that content and that its editorial control is limited to the selection of those materials to make available. We accept no liability for any loss or damages arising from use.