Central Leader - - FRONT PAGE -

Some­times peo­ple make mis­takes which might be laugh­able, if they weren’t so tragic.

One such mis­take was made by a woman who took out a life in­sur­ance pol­icy from her bank, which would pay $50,000 if she suf­fered a per­ma­nent dis­abil­ity, and $500,000 if she died.

The ap­pli­ca­tion form asked for her weight in kilo­grams, and she wrote ‘‘119’’, but added ’’lbs’’.

Five years later, she was di­ag­nosed with can­cer and made a claim.

When the bank in­ves­ti­gated, it found she weighed 119 kilo­grams, not 119lbs (54kg).

54kg is in the ‘‘healthy’’ BMI range for some­one of the woman’s height. 119kg is obese.

A slam dunk case of some­one mis­lead­ing an in­surer, even if it was by ac­ci­dent, which surely it was.

In such cases, the in­surer is en­ti­tled to ‘‘avoid’’ the claim, tear the pol­icy up, and keep all the pre­mi­ums.

And yet, the bank of­fered to Al­ways fight your cor­ner

Take great care with in­sur­ance forms

Go to pains to dis­close ev­ery­thing

re­fund $5000 in pre­mi­ums to the woman ‘‘out of sym­pa­thy for her sit­u­a­tion’’.

We know about this poor woman be­cause she made a com­plaint to the Bank­ing Om­buds­man, which pub­lished a case note.

The om­buds­man found the bank was en­ti­tled to de­cline the claim, and yet, the bank ac­tu­ally of­fered her com­pen­sa­tion in ad­di­tion to the re­fund. The woman ac­cepted.

Banks don’t tend to hand out money when they don’t need to, so why did it of­fer more?

I sus­pect the in­sur­ance was sold face-to-face in a branch, and that some­one in the bank saw they were deal­ing with an obese per­son, which is why the woman in­sisted to the om­buds­man the bank should have known her real weight.

It’s not the first time the om­buds­man’s had a case like this. In an­other from this year, a man took out life in­sur­ance with dis­abil­ity and re­dun­dancy ben­e­fits when he bought a house.

A banker vis­ited his house and helped him ap­ply. Five years later, he made a claim when he needed surgery caused by his di­a­betes, which he had when he took out the pol­icy.

It was de­clined be­cause the pol­icy did not cover pre-ex­ist­ing con­di­tions, though as with the woman, it of­fered him a good­will pay­ment.

The bank had given the man in­for­ma­tion stat­ing pre-ex­ist­ing con­di­tions weren’t cov­ered, but the bank’s in­ter­nal in­for­ma­tion showed the pol­icy was de­signed for healthy peo­ple who didn’t need cover for pre-ex­ist­ing con­di­tions.

The om­buds­man be­lieved the bank knew the man had di­a­betes, though also found the pol­icy was suit­able for him be­cause it pro­vided cover for other ill­nesses, injuries and re­dun­dancy. There are lessons here. Or­di­nary peo­ple, who are not ex­perts in in­sur­ance, have a duty to tell in­sur­ers what they need to know. Peo­ple must read poli­cies, and take care when fill­ing in forms.

But, bank staff make mis­takes too. Sales pro­cesses can be flawed. Red flags can be missed, or will­fully ig­nored. Peo­ple are sold poli­cies they don’t un­der­stand.

These cus­tomers won par­tial vic­to­ries, but when they most needed their in­sur­ance, they found they’d been pay­ing for noth­ing.


There’s a big dif­fer­ence be­tween kgs and lbs.

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