A recent study by the Association for Savings and Investments South Africa (ASISA) holds an important lessons for all South Africans looking to invest in life insurance: be honest with your life insurance company when applying for cover.

The ASISA research evaluated the rate at which life insurance claims* were rejected or declined by 12 long-term insurance companies in 2012. Of the 34 724 claims submitted, only 352 were declined, or in other words 99% of all claims were paid out. While this is good news for policyholders it is important to take a closer look at the reasons why claims were rejected.

According to the study claims were rejected for the following reasons:

Non-disclosure (70.34%)
According to ASISA non-disclosure is 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’. An example of non-disclosure would be if an applicant were not completely honest about an existing medical condition or his/her family’s medical history.

Suicide (20%)
South African life insurance companies impose a two-year waiting period for suicide on all life insurance claims. In this case claims were declined if the insured committed suicide within the waiting period.

Underwriting exclusions (6.13%)
This refers to claims being rejected because the policyholder died as a result of a condition that is excluded by the policy.

Fraud (3.42%)
Just over 3% of all claims were declined as a result of claims fraud, for example identity theft.

How to ensure your claims are honoured
Don’t run the risk of a rejected life cover claim. Here is how you can ensure that your policy is not declined:
•Never withhold information from your provider. Answer all questions about your lifestyle, your health and your family’s medical history honestly and in as much detail as possible
•Check all of your application forms and policy documents carefully. Ensure that all the information you provided was recorded correctly in your policy documents.

While withholding information from your provider might mean that your premiums are cheaper you will run the risk of a rejected claim. Be honest with your provider and secure your family’s financial future.

* – only fully underwritten life insurance policies were evaluated

Read more…

https://www.1life.co.za/blog/life-cover-honesty-does-pay/