Tell us everything, just to be sure


Life insurance clients can be covered adequately, no matter their circumstances. Avoid non-disclosure exclusions and share with your provider.

It may be tempting to get cheaper long-term insurance cover by omitting vital information during the application process. However, Dr Maritha van der Walt, Chief Medical Officer for Discovery Life and convenor of the Medical Underwriting Standing Committee of the Association for Savings and Investment South Africa (ASISA), cautions that this is a very short-sighted approach to take, should a devastating life event occur.

The risk of non-disclosure

Van der Walt explains that a life insurance company is within its rights to not pay out a claim and to declare your policy void should it come to light that you were dishonest or that you failed to disclose important details when you took out your policy. “Discovery supports clients with solutions to non-disclosure. We want peace of mind for our clients, and we want to make sure we can pay out on their policies” says Van der Walt.

While South African life insurers paid 99.3% of all claims against fully underwritten life policies last year, half of the claims that were declined was due to non-disclosure. In terms of numbers, this meant that while 34 100 death claims were paid, 120 families did not receive death cover worth close to R160 million, because the policyholder did not disclose material information about a medical or lifestyle condition in an attempt to secure cover or avoid loaded premiums.

Van der Walt says since it is generally accepted that the person applying for insurance knows more about the risk to be insured than the insurer, the law compels applicants to honestly disclose all information likely to influence the judgment of the insurer when determining appropriate policy terms and premiums. Information generally regarded as material include medical history, state of health, family history, and lifestyle.

“All claims are assessed objectively and fairly and decisions to reject a claim or to void a policy are not taken lightly. Tests will apply, but problems at claim stage can be completely avoided with full disclosure of all the required information,” she says.

Having all the facts at their disposal enables the life insurer’s underwriters to determine the exact risk of each applicant to the insurance company. This is important because it allows the life insurance company to adjust premiums for different risk categories, thereby ensuring that every person pays a fair premium without subsidising someone less healthy.

When in doubt rather disclose

“If you are in doubt about whether information is in important or not, rather disclose it and let the underwriters decide whether it is material,” advises Van der Walt.

While it may therefore be tempting to keep quiet about your ailments or pending medical investigations, should you claim for a condition that was subsequently diagnosed as a result of the investigations, the claim might be declined. “Rather be honest and if your cover is declined then you and your loved ones can at least plan ahead for the financial impact should something happen,” she says.

Van der Walt says even if you do not qualify for comprehensive life cover, you can apply for accidental death cover, which only pays if you die as a result of an accident.

She adds that there is also a growing range of products available to people living with the human immunodeficiency virus (HIV), which include life, disability and critical illness cover. South Africa was the first country to introduce life cover for people living with HIV in 2001.

What is the broker’s role?

Sylvia Steyn, Head of Individual Life Claims at Discovery Life says the financial adviser or intermediary, broker or agent has “quite an onerous role to play”. “Aside from rendering the financial advice and making recommendations for the appropriate product and level of cover needed by the client, they need to go one step further when the client completes the life application form. The application form is actually a contract that is being entered into between the client ( the applicant and life to be insured) and Discovery Life.”

“Discovery uses best in class interactive technology to ensure our clients understand the principles of insurance and know what they’re signing up for,” Steyn adds.

In terms of the obligations that the law imposes on advisers, the onus is on him or her on them to explain to the applicant the importance of correctly and honestly disclosing all material information in the application form. This includes both medical and occupational information. Furthermore he or she should explain the consequences of failing to correctly disclose the information asked, says Steyn.

Consequences of non-disclosure

“The information given to Discovery Life in your application form, or any other documentation that you provide in support of your application, forms the basis upon which your policy is issued,” says Steyn.

Should you not disclose any information, or provide false information or distort information when applying for your policy, Discovery Life will be entitled to suspend your cover from the inception date of your policy. In addition to this, Discovery Life will also be entitled to:

  • refuse to pay out any current or future claims that are related to the misrepresentation or non-disclosure
  • adjust your premium from the date of the misrepresentation or non-disclosure
  • recover monies already paid to you for claims that relate to the misrepresentation or non-disclosure
  • cancel or reduce certain benefits or your entire policy with immediate effect, and retain any premiums paid to Discovery Life
  • as a penalty.

“It is therefore important for the client to go through each and every medical and occupational question asked and answer this truthfully. Even if the advisor is completing the form on their behalf the client signs the application and declares that they have correctly disclosed all material information. If anything goes wrong at Claims stage , they cannot lay blame on the advisor in this instance,” says Steyn.

“As an aside we have recently revised our application forms and will very soon be highlighting the importance of providing truthful information on the very first page and part of this will include the client signing and acknowledging the consequences of providing false information or misrepresenting information,” Steyn adds.


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