Is your cover still up-to-date and valid? Make sure you haven’t made these 10 mistakes, as outlined by Selwyn Kahlberg, managing director of Alexander Forbes Life Limited.
- Failing to disclose all relevant information on your application
Deliberately withholding or giving misleading information to your insurer is a direct violation of your policy agreement. This can result in all claims being rejected. If you have a previous medical condition (say you’ve had a heart attack), be sure to disclose that when you apply for life and disability cover. If you don’t and you have a second heart attack, you won’t be able to claim.
- Taking out insufficient cover
Life cover is meant to provide financial security for your family when you die. Similarly, disability cover needs to ensure that you and your dependents are able to maintain your lifestyle should you not be able to perform your current job. The best thing to do is draw up a budget that reflects your family’s daily needs and expenses. Then decide how much cover you need. Revisit your requirements when your circumstances change, taking inflation into account, too.
- Not informing your insurer that you have changed jobs
Changed employment terms can affect the cost and level of your cover. For example, if you were an office clerk and get a new job as a fire fighter, your risk level would increase substantially and your insurer would need to review your policy.
- Failing to inform loved ones of your cover or whereabouts of documentation
If you don’t inform your loved ones about your life or disability cover they can’t claim if the need arises. Kahlberg suggests you keep the policy in a safe place and tell your loved one whom to call in the event that they need to do so.
- Failing to inform insurers of a claim within the required time
Almost all policies require that claims are notified to the insurer within a specified time where after the claim can be declined. This is one of the most common reasons for claims not being paid. Dependants may forfeit their benefits if they delay telling the insurer about a claim or do not supply the required documents to the insurer within the times specified.
- Not keeping the nominated beneficiaries up to date
Always ensure that you let the insurer know about changes to the nominated beneficiaries on all your policies. Once a claim arises, the insurer will always pay according to what you last instructed them. For example, if you have had another child and want a specific amount set aside for it you will need to change the beneficiary forms held by the insurer.
- Not providing full information when making a claim
Always ensure that the insurer is given as much accurate information and documentation as possible. This is especially the case with disability claims. Incomplete or conflicting information will cause delays in getting a claim paid. Kahlberg has this to say: “Don’t forget to provide your insurer with your dependants’ ID numbers, or supply incorrect or different numbers.”
- Not disclosing that you have taken on additional risk, like smoking or engaging in dangerous activities
Insurers charge higher premiums for individuals that smoke or are at higher risk of getting ill or dying. “If you sign on as a non-smoker and then start smoking and develop lung cancer, your insurer is within their rights to reduce your benefits or maybe even repudiate your claim,” warns Kahlberg. If you’re disabled in a once-off parachute jump you won’t qualify for disability cover if you haven’t listed this as one of your pastimes, as accepted by the insurer.
- Not familiarising yourself with the circumstances under which your policy will not pay
There are times when a policy will not pay out, even if you’ve made full disclosure to the insurer. “These circumstances should be clearly set out in your policy under the exclusions heading and you should take the time to understand these exclusions before signing up,” says Kahlberg. Typical exclusions relate to alcohol consumption, drug usage, suicide and violation of the laws of the land.
- Allowing your insurer to repudiate your claim without good reason
Consumers should not sit back and allow insurers to repudiate claims except for valid and legal reasons. If you believe you have a strong case, but your insurer refuses to settle, take the matter to the insurance ombudsman.
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