5 Reasons why your life insurance claim may be rejected
Published on 30th March, 2022 at 10:19 am
Life insurance companies pay billions of rands in claims every year, but not all claims that are submitted are paid. Here we look at some of the top reasons a claim could be declined.
Karen Bongers, a product development actuary at Sanlam Individual Life, explains that while Sanlam is committed to paying all valid claims, an invalid claim will be rejected. “There can be various reasons for a claim being deemed invalid,” says Bongers. Reasons for claim rejection include:
Claim rejection reason #1: Non-disclosure of relevant information
If you provided inaccurate information to your insurer when applying for risk cover, it may result in an unsuccessful claim later on. “An insurer accepts an application based on the medical, financial, lifestyle, occupational and any other information that was provided during the application process,” says Bongers, adding that they use this information to decide whether to insure you and any other insured persons, what your premium is going to be, and whether to add additional premiums or exclusions.
If, when you want to claim, the insurer discovers that inaccurate or incomplete information was provided about you or anyone insured on your plan, they may reduce or decline your claim. “It’s therefore essential to ensure that the information provided during the application process and any subsequent transactions is accurate,” she stresses.
Claim rejection reason #2: Not being covered at the time of claim
To qualify for a claim, you need to have had cover at the time of the claim event. Being without cover could be a result of not having paid your premiums on time, or your benefit having ended. When you miss a premium payment, a grace period usually applies (refer to your contract documents for the exact terms and conditions), which can give you a bit more time to pay your premium before your cover lapses. “This is why you need to pay your premiums when they are due to avoid being out of cover when you need it the most. Also check when each benefit’s end date is, after which it will no longer provide cover,” urges Bongers.
Protect your finances with these practical money tips to navigate tough economic times.
It’s worth noting that some insurers also offer premium holiday options to help you reinstate your cover more easily after a period of not being able to pay premiums, and you may enjoy limited cover during the period while you’re not paying premiums. “Always speak to your insurer to learn what your options are,” she says.
Reality Health and Plus members get up to 30% discount on risk cover premiums including life insurance, disability cover and income protection. Learn more here.
Claim rejection reason #3: You claim for an exclusion
If you claim for something that is indicated to be excluded in your contract documents, your claim will be declined, as the exclusion means that you don’t have cover for that condition or event. Typical exclusions include suicide exclusions on death benefits (usually for a period of two years from inception or an increase in cover), benefit-specific exclusions (for example, an income protection policy not covering you for cosmetic surgery) and life-specific exclusions (such as medical exclusions that were placed on your benefits because you had a pre-existing medical condition when applying for cover).
“Exclusions are often medical in nature, but can also be related to certain risky activities such as motorised racing or visiting high-risk countries. Always read through your contract documents carefully to understand what is excluded,” says Bongers.
Claim rejection reason #4: The condition is not covered by the benefit
To have a valid claim, you need to have been covered for the condition that you want to claim for and meet the requirements of the claim event definition. Your contract document will provide the claim event definition that must be met. “For example, if you have early cancer, but your severe illness benefit only covers cancer from stage one, you will not have a valid claim. Again, check your contract documents to see what you are covered for,” stresses Bongers. “Your financial planner can assist you with determining how comprehensive your cover is compared to what is available in the market.”
Book a basic medical test and get rewarded for it! As a Reality Core, Plus or Health member, you can earn up to 10 000 tier points by booking a basic medical test at any Clicks pharmacy. Click here to learn more.
Claim rejection reason #5: Income protection benefits
Income benefits are based on the principle of being unable to work for a specified period of time before the benefit pays out. This is called the waiting period, the shortest one being seven days. For example, for a sickness benefit, you need to be booked off for at least seven days before you can claim. “If you were only booked off for four days and submit a claim, your claim will be declined, as it is not a valid claim,” explains Bongers.
Sanlam Reality Plus and Health members get up to 30% off risk products such as income protection.
To find out what type of insurance is best suited to you, your life stage and financial circumstances, or how comprehensive you cover is, speak to a financial planner.
Want to learn more?
We send out regular emails packed with useful advice, ideas and tips on everything from saving and investing to budgeting and tax. If you're a Sanlam Reality member and not receiving these emails, update your contact details now.Update Now