A real matter of knowing about your life after a death
The Ombudsman mediates between members of the insurance industry and policyholders
It is crucial for purchasers of insurance cover to familiarise themselves with the policy restrictions, the Ombudsman for Long-Term Insurance Judge Ron McLaren has said.
He said the majority of complaints received by his office related to the rejection of claims due to death during the waiting period and claims being refuted due to a pre-existing condition.
‘It appears from these complaints that the complainants were often unaware of the policy restrictions applicable to the cover.
‘If a consumer does not know what exactly is covered and what is excluded, expectations are raised which are not fulfilled. This can leave a claimant in a financially precarious situation and can also cause distress after a claim is rejected,’ said Judge McLaren.
He also cautioned that when a policy is sold over the telephone, the applicant must concentrate throughout the telesale and ask questions when something is unclear.
‘It is important for an applicant for a policy to know exactly what the policy will cover.’ – SA Insurance Ombudsman
Most funeral policies have a waiting period during which the life insured is covered only for accidental death.
Even if the life insured dies one day before the end of the waiting period from natural causes, the policy benefit will not be payable.
It is important for the policyholder to understand when the waiting period will end.
It could be at the end of a defined period such as at the end of the six months, or it could be after a defined period and the payment of a certain number of premiums.
The waiting period usually also applies after a policy is reinstated after it had lapsed.
Beware the exclusions
It is also vital for policyholders to understand the pre-existing condition clause.
Life policies issued after no medical underwriting or after limited underwriting often have a pre-existing exclusion clause inserted, either for a determined period, or for the entire term of the policy.
If a claim event happens and it has been caused by the pre-existing condition during the applicable period, no claim will be payable.
The scope of the wording of the pre-existing exclusion clause can determine whether the exclusion applies to events which are only directly caused by the pre-existing condition or, claim events caused both directly and indirectly by the pre-existing condition and where the pre-existing condition is a contributory cause.
About the Ombudsman
The office for the Ombudsman for Long-Term Insurance was established in 1985.
The function of the office is to mediate in disputes between subscribing members of the long-term insurance industry and policyholders regarding insurance contracts.
It is an independent office which is accountable to an independent Long-term Ombudsman Council for providing an efficient and independent service to policyholders and others in response to disputes arising from long-term insurance policies.
For more information visit www.ombud.co.za or use the sharecall number 086 010 3236.
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