By Anton Keet
The pay-out from life insurance or disability or dread disease cover can help you and your family cope financially in difficult times. But if an important detail is not disclosed – even if it was not intentional – this may lead to a claim being rejected by the insurance company.
If you claim for a benefit you are not entitled to, that’s insurance fraud. This might be deliberate – falsifying documents, for instance – but it may also be the unintentional non-disclosure of important information.
As much as 60% of the claims declined by life insurance companies belonging to the Association for Savings and Investments SA were not paid because there was non-disclosure of some form by the policyholder. In many cases, the non-disclosure was inadvertent.
It really is important to disclose everything when you take out a policy. When it comes to full disclosure, there is never too much information. You need to consider your claim history and your medical history – as well as that of your family.
Health information
Most insurers need a full and accurate picture of your health and lifestyle past and present as well as an HIV test when you apply for the cover. This is what they base your premiums on. Most insurers will, however, also require you to keep them updated of any changes to your health and will also ask about your health when there is a claim on a policy. Be sure to ask your insurer what health information they need to know and when.
Such information includes:
- Having a chronic illness such as diabetes, hypertension (high blood pressure), high cholesterol or heart disease, asthma or arthritis;
- Depression that requires treatment or care;
- Chronic pain, such as back pain, that you regularly self-medicate for;
- Previous illnesses such as Covid-19, cancer, or a heart attack, even if you have fully recovered; and
- Your family history of serious illnesses such as cancer or heart disease.
Lifestyle information
You will also need to give your insurer relevant information about your lifestyle when you apply for cover and then again during your policy contract. For example, if you apply for a policy in 2010 and take up cave diving in 2021, you need to tell your insurer in 2021 that you now have a dangerous hobby. On the other hand, keeping your insurer informed can also help you reduce premiums. For example, if you stop smoking, your premium can decrease by nearly half!
Examples of such lifestyle information you should update and consistently disclose can include:
- How much and what kind of alcohol you drink;
- Smoking status, including vaping;
- Your weight and height;
- Hazardous pursuits, such as skiing, cave diving or rock climbing;
- Any personal and work travel, especially outside the borders of South Africa; and
- Your occupation – what work you do and how far you travel to and from work daily.
Financial information
Finally, your financial position is also important. Your insurer needs a brief but accurate picture of your finances to make sure you are not over-insuring. Although this is rare, it can happen and can result in claims being rejected or claim payouts being reduced.
Top tips
- Give too much information rather than too little;
- Keep a health file with your complete health history – we are all human and can forget operations or health issues we may have had a decade ago;
- Have regular health checks and update your insurer on any changes; and
- Be honest about your health and lifestyle.
You can always ask your financial adviser or insurance broker if you are unclear on what you need to disclose and when. It’s always better to be safe – so ask if you are unsure.
Anton Keet is the head of risk services at 1Life
This article first appeared in IOL MONEY, a free, downloadable digital magazine. MONEY and other digital magazines covering a wide range of topics are available HERE!
PERSONAL FINANCE