Cash boost extended as Aussies urged to 'act now' to get up to $144,000: 'Blown away'
But the Australian Financial Complaints Authority (AFCA) has now pushed that deadline back to June 30. Pensioner Donna recently applied through Claimo to see if she was owed anything and was shocked when she received $11,000 back.
"I was blown away," she told Yahoo Finance. "The pension isn't much to live on and we're still paying our house off, so this has made things a bit easier."
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For decades, when Aussies applied for credit cards, personal loans and mortgages, they were convinced to pay for insurance to support the credit.
However, many of these financial institutions neglected to mention that this insurance was entirely optional.
The value of the insurance on the loan was bundled into the total amount of the loan, which substantially increased the payable interest, and caused loans to take up to a third longer to pay off.Donna took out a personal loan with NAB around 17 years ago and thought the insurance was legitimate.
But Claimo looked into her case over a few months this year and found she was entitled to compensation as a result of the junk insurance.
Claimo is one of several companies that have been investigating these policies for Aussies who were caught up in the strategy, which was officially outlawed after a Royal Commission.
"Banks were incentivised in commissions to sell these insurances without fully understanding what impact they could have on consumers," Nikola Araouzou, Claimo co-founder, told Yahoo Finance.
"So we did see a lot of consumers who are unable to benefit from these policies being sold to them."
While Donna's $11,000 result is impressive, Araouzou said the biggest win to date has been $144,000.
"If there's a charge that you don't recognise, it might be called consumer credit insurance, mortgage protection insurance, credit card insurance, something like that, then you need to lodge a complaint with your bank about that charge," she told Yahoo Finance.
The co-founder said some of the wins had been "life-changing" for recipients.
Victorian resident Karen Wright was able to get back nearly $15,000 after having junk insurance attached to three separate personal loans a few decades ago.
"When the payout happened, I couldn't believe it. That's quite a lot of money when you think about it," she told Yahoo Finance.
"I'm very happy with that extra little help that I've got because today is pretty tough living."
Teena and her husband Troy knew something wasn't quite right when they noticed their home loan balance wasn't reducing despite their regular payments.
"We tried to get out of the insurance, but it was so hard,' Teena said.
The NSW couple ended up getting a refund of $111,159.
'It's going straight on the mortgage and will mean we will have our home paid off in the next year or so instead of in the next 10 or 20, it's life-changing," she said.
AFCA has revealed the June 30 deadline will be the "last date" for people to lodge their complaint about junk insurance.
The Authority said if you believe you bought this type of insurance before July 2019, "now is the time to act".
'It's important that consumers know this deadline is fast approaching,' AFCA's lead ombudsman for insurance, Emma Curtis, said.
You can ask your lender to investigate if you had any junk insurance, or you can go through a company like Claimo.
But be aware that Claimo take 30 per cent of your payout as a fee.
A poll of more than 4,400 Yahoo Finance readers found 60 per cent of people weren't sure whether they had signed up for junk insurance in the past.
Donna said it was worth checking if you aren't sure, as you could end up with tens of thousands of dollars in your pocket.Sign in to access your portfolio
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