Haven’t been upfront with your insurer? Here’s what to do

Last updated on 17th July, 2018 at 10:13 am

When Bongi signed up to disability insurance, she failed to mention the car accident she’d been in 10 years ago. Does it matter, since it was a decade ago? Well, in the accident Bongi sustained cracked ribs, damage to her vertebrae and whiplash. And these injuries still plague her now: for over a year, Bongi’s been experiencing severe back pains. Now, a visit to various specialists mean she’s been recommended for a back operation. Bongi can no longer fulfil her work commitments which require her to be fully mobile. No problem – since Bongi has disability insurance, right? Wrong. Bongi’s insurance company has now repudiated her disability claim due to non-disclosure of her accident.

What is non-disclosure?

Bongi’s story touches on the controversial issue of non-disclosure. Although life insurance companies honour the vast majority of claims, even the small number of repudiated claims can be avoided by following simple steps that enable the insurer to get the full view of a client’s risk, says Petrie Marx, Product Actuary at Sanlam Individual Life.

“Insurers exist to provide clients with peace of mind and to pay claims. The monthly premium clients pay is based on the insurer’s assessment of the client’s risk. To determine this, clients are required to disclose information on their medical history and that of their close relatives, their work, hobbies and so on,” says Marx.

In this way, a fair price and pay-out are ultimately based on the truthfulness of this disclosure. But what happens when you remember a specific incident or something that you didn’t disclose at the outset?

Be sure to take these steps

Marx explains key pointers to avoid facing non-payment of claims further down the line:

1. Don’t rush the application process: Very few of us enjoy completing forms and as a result, it can be tempting to rush through questions without giving them proper consideration. Insurance forms by their nature can be pretty lengthy due to the wide range of information they need to gather. Take this process seriously and give it the attention it deserves to avoid realising you’ve left off critical detail that could negatively impact having claims paid by your insurer later on.
2. Family matters: Insurance forms can require that you disclose information about family medical history. It’s worth checking with immediate family on this as you might not actually know all of the facts. For example, if your mother had cancer treatment earlier in her life and you omitted to mention this, it could be problematic for you if you were diagnosed with the same disease and needed to claim from your insurer. The exception will be if you honestly didn’t know about such a past medical condition..
3. Better late than never: If you later remember something about your health, medical record, hazardous work activities or a dangerous hobby relevant at the time that you failed to mention, you need to bring this to your insurer’s attention in the interests of enabling them to make a fair and informed decision about accepting and pricing the risk. It’s important to note that there could be adjustments to your cover such as a reduced cover amount, loading to your monthly premium, exclusions and in rare cases, a cancellation of the policy.
4. Ask questions and use a financial planner: There is no stupid question when it comes to insurance, so use the expertise of an accredited financial planner when purchasing risk cover to ensure that you understand the terms of your cover, including your duty to disclose and the consequences for not disclosing material facts. If you’re uncertain about whether a particular matter or information is material or not, it is always better to check with the insurer than to assume otherwise. Insurers are obliged to be fair in their risk assessment, and will not use information to unfairly discriminate against you. So tell your financial planner or insurer about your motorbike racing or paragliding hobby – rather safe than sorry.

The buck stops with you

Insurers need accurate information to be able to assess the risk they are asked to carry when someone applies for cover. It’s important to note that South African laws governing insurance transactions place the duty to disclose on the person who is seeking insurance. Insurers are only required to accept information given to them in good faith, and there is no duty on them to investigate anything when you apply for cover. So the buck literally stops with you. Don’t make the mistake of leaving out important facts that could compromise your cover when you or your family need it the most.