CR110 The complainant alleges that she could never qualify


The complainant alleges that she could never qualify for one of the benefits provided under the contract and that the policy was therefore incorrectly sold.


The complainant effected a five-year credit assurance contract with the insurance company in November 2003. The contract, which featured the standard 30 day cooling off qualification, provided death cover, both temporary and permanent disability benefits, a dread disease benefit and a retrenchment benefit. The policy attracted a single premium of R2400. The policy was sold as a package and the various benefits could not be sold separately.

The complainant reached the age of 60 on 18 January 2004 which meant that she could never qualify for the retrenchment benefit as 60 was the limiting age and there was a three months waiting period for this particular benefit.

Early this year the policyholder was retrenched. It would appear that she submitted a claim for retrenchment benefit which seemingly was declined, not because of the age restriction but because she did not meet the terms and conditions of the retrenchment benefit. She had accepted a voluntary retrenchment which was specifically excluded. At the time of this claim the complainant read the policy conditions in some detail and discovered that she would in fact never have qualified for the retrenchment benefit. She demanded a refund of the entire single premium.


It was the Ombudsman’s opinion that both parties were to some extent to blame; the complainant for not reading the contract when it was issued resulting in her not taking advantage of the cooling off period, and the life assurer for accepting a risk where they would have known in advance that part of cover would not have been available to the policyholder. It was the Ombudsman’s view that the insurer had a responsibility to alert the policyholder to this situation.


The premium relating to the retrenchment benefit was refunded together with interest and a modest compensatory award. The policy remained in force providing cover for death and disability.
October 2005