Make sure you prop­erly dis­close all when tak­ing out a life pol­icy

Weekend Argus (Saturday Edition) - - PERSONALFINANCE -

show, there are grey ar­eas.

The grey ar­eas are a prob­lem, be­cause a claim can be re­pu­di­ated even if you gen­uinely for­got some­thing or con­sid­ered it in­con­se­quen­tial.

The prob­lem is far greater with dis­abil­ity claims than with death claims.

Life as­sur­ance com­pa­nies are of­ten ac­cused, both un­fairly and some­times fairly, of “un­der­writ­ing in ar­rears”. In other words, they start look­ing at the claims stage for rea­sons to re­pu­di­ate a claim.

And they have a lot of re­sources to use, which en­ables them to catch you out if you did not prop­erly dis­close in­for­ma­tion up­front.

One of the as­sur­ers’ main weapons is a com­pany called As­tute, which is owned by Old Mu­tual, San­lam and Lib­erty (next week’s col­umn will deal with As­tute in a bit more de­tail).

Among other things, As­tute al­lows life com­pa­nies to swop in­for­ma­tion they have on you. So, for ex­am­ple, it could show up, through a check at claims stage, that an al­co­holic who did not drink for 22 years was re­jected for a life pol­icy 24 years pre­vi­ously be­cause of al­co­holism.

If this was not de­clared up­front, I sug­gest that the re­pu­di­a­tion of a claim would be jus­ti­fied.

I raised the is­sue of the life com­pa­nies do­ing bet­ter checks when poli­cies are is­sued, rather than at the claims stage, with the As­so­ci­a­tion for Sav­ings & In­vest­ment SA, to pre­vent the prob­lem, mainly for de­pen­dants, of re­pu­di­a­tions (see “As­sur­ers gen­er­ally ‘very le­nient’ at claims stage on non-dis­clo­sure”, be­low).

It all boils down to telling your life com­pany as much as you can about your life­style and health to en­sure that, if some­thing hap­pens to you, your de­pen­dants will re­ceive what you planned they should re­ceive.

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