Be honest with your life insurer

Posted on Monday, August 17, 2015

Good news! Recent research by The Association for Savings and Investment South Africa (ASISA) has revealed that life insurers paid out 99% of all claims made in 2012. There is bad news however. The majority of those claims that were rejected were given the axe due to non-disclosure by policyholders. The research paints a grim picture: if you withhold information from your life insurance company any claims your dependants make against your policy might be rejected. Find out how you can bullet proof your policy and ensure that your family’s claims are honoured.

A 2012 study by ASISA examined the rate at which life insurance claims were paid or rejected last year. Of the 34 724 claims submitted to 12 long-term insurance companies, only 352 were declined. The majority of those claims that were declined were rejected because of non-disclosure, or ‘the deliberate failure of policyholders to disclose information about a medical or lifestyle condition, which is material to the assessment of the risk to be insured.’ Or, to put it simply, they were declined because policyholders withheld information from their insurers and did so deliberately. 

The study goes on to say that the balance of the claims were rejected due to fraud, underwriting exclusions (when the insured dies as a result of an excluded condition, for example diabetes) or because the insured committed suicide before the standard two year waiting period was over.

Make sure your policy pays!

What can we learn from the ASISA study and how can we ensure that our policies are squeaky clean?

  • Give honest, detailed answers to all questions asked by your provider including those covering your health and medical history and that of your immediate family
  • If you drink or smoke, fess up!
  • Check that the answers you gave to medical and lifestyle questions are correct and review all policy documents that are sent to you
  • If you take part in dangerous recreational activities or if your occupation involves high-risk activities be sure to tell your insurer

Being completely honest when answering all questions might mean that your premium is loaded or exclusions applied to your policy. This cannot compare, however, to having your family claims rejected!

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