As­sur­ers gen­er­ally ‘very le­nient’ at claims stage on non-dis­clo­sure

Weekend Argus (Saturday Edition) - - PERSONALFINANCE -

Dr Pi­eter Coet­zer, con­venor of the med­i­cal and un­der­writ­ing stand­ing com­mit­tee at the As­so­ci­a­tion for Sav­ings & In­vest­ment SA, says that life as­sur­ance com­pa­nies are in busi­ness to pay claims. If they de­vel­oped a rep­u­ta­tion for not pay­ing out, no one would take out a risk pol­icy. It is there­fore in the best in­ter­ests of both the as­surer and the pol­i­cy­holder to elim­i­nate non-dis­clo­sure.

He says val­i­dat­ing health dis­clo­sures at un­der­writ­ing (pol­icy-is­su­ing) stage is usu­ally only pos­si­ble in coun­tries where as­sur­ers have ac­cess to the full health records of the client, such as in the United King­dom, with its national health pro­gramme. In South Africa there are prac­ti­cal lim­i­ta­tions, which in­clude:

Most pol­i­cy­hold­ers have more than one doc­tor, and of­ten do not dis­close this, or may se­lec­tively dis­close only those who have favourable in­for­ma­tion.

Doc­tors are busy. Some doc­tors refuse to un­der­take ad­min­is­tra­tive tasks such as com­plet­ing in­sur­ance forms.

Ad­min­is­tra­tive and health as­sess­ment costs to the in­dus­try can be sig­nif­i­cant, es­pe­cially where more than one doc­tor or spe­cial­ist is in­volved.

Coet­zer says the reader’s sug­ges­tion for more com­pre­hen­sive checks by the life in­dus­try is im­prac­ti­cal, be­cause most clients need the cover quickly and have very short turn­around times on want­ing their poli­cies im­ple­mented.

Coet­zer says the nondis­clo­sure of in­for­ma­tion is gen­er­ally dealt with very le­niently by most in­sur­ers. Only in­for­ma­tion that ma­te­ri­ally af­fects the terms of the pol­icy would be re­garded as grounds for re­pu­di­a­tion. “This means that the pol­i­cy­holder does not have to men­tion triv­i­al­i­ties.”

Not all non-dis­clo­sure will af­fect the pay­out of the claim. And pol­i­cy­hold­ers who have made hon­est and com­plete dis­clo­sure should have noth­ing to worry about. But, Coet­zer adds, it is al­ways bet­ter to dis­close too much than too lit­tle.

RET­RO­SPEC­TIVE

In cases of ma­te­rial nondis­clo­sure, most com­pa­nies “do ret­ro­spec­tive un­der­writ­ing, us­ing the in­for­ma­tion not dis­closed to de­ter­mine what the terms of the pol­icy would have been had full dis­clo­sure been made at in­cep­tion. Any ad­di­tional pre­mi­ums that may have re­sulted be­cause of this are then de­ducted from the claim amount. In this way, both par­ties are put into a sit­u­a­tion as if ev­ery­thing had been dis­closed.

“It is only when the orig­i­nal ap­pli­ca­tion would have been de­clined, or when some health in­for­ma­tion that would have been re­quired can­not be ob­tained ret­ro­spec­tively, that the claim is de­clined in to­tal.”

Coet­zer says it is not true that com­pa­nies in­ves­ti­gate health is­sues at claims stage to look for rea­sons to de­cline a claim. “The aim is to ver­ify whether full dis­clo­sure was made at in­cep­tion.”

He says much of the prob­lem can be over­come if ev­ery­one truth­fully dis­closes sig­nif­i­cant health events such as op­er­a­tions, spe­cial­ist con­sul­ta­tions, ab­nor­mal scan and blood test re­sults, hos­pi­tal­i­sa­tions, med­i­ca­tions cur­rently used, cur­rent con­di­tions and cur­rent habits. You are not ex­pected to re­mem­ber ev­ery mi­nor event such as a sprained an­kle.

If you do not know the ex­act tech­ni­cal de­tails of a health event, such as the med­i­cal di­ag­no­sis, it is suf­fi­cient to men­tion the year, the name of the doc­tor in­volved, and more or less what was wrong. In th­ese cases the as­surer can ob­tain more de­tailed in­for­ma­tion from the clin­i­cian.

Coet­zer also sug­gests es­tab­lish­ing an in­dus­try-wide cen­tral elec­tronic health data­base, which could prob­a­bly be an ex­ten­sion of As­tute (see main story above), which could record your health his­tory – but with your per­mis­sion.

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