CR314 Pre- existing condition – Death Claim under credit life policy

Pre- existing condition CR314

Death Claim under credit life policy – policy containing a pre-existing condition exclusion clause– was there any need for the proposer to undergo medical examination notwithstanding the aforesaid exclusion clause?


On 9 February 2007 the deceased took out a credit life policy covering his death, disability, retrenchment and dread disease. He died on 19 June 2008 as a result of diabetes mellitus. The complainant thereupon lodged a claim but the insurer declined it on the basis of a pre-existing condition exclusion clause in the policy which read:
“No amount shall be payable
(a) in the event of:
(i) Your illness, bodily injury, physical defect, ill-health or any other incident or condition which materially contributed to the Death, Disability or Dread Disease claim against the policy, existed prior to the Commencement of insurance. ”

The certificate provided by a medical doctor at claim stage revealed that the deceased had been diagnosed with sugar diabetes on 25 November 2004, more than 2 years prior to the commencement of the policy. The complainant approached our office, contending that the insurer should have “checked” on his health status before accepting his proposal.

It was clear that the pre-existing sugar diabetes had materially contributed to the cause of the policyholder’s death.

As to the complainant’s contention it was pointed out that in general insurers follow one of two courses:
(a) On the one hand they underwrite the proposal, and for this purpose usually require the proposer to undergo medical examinations or to answer a series of medical questions, and on the basis of the information elicited by this means their underwriting may result in them imposing (apart from other possible terms) exclusions for the specific conditions so disclosed.

(b) On the other hand there is no underwriting, which is what happened in the deceased’s case. In such a case the proposer may not be asked any medical questions or required to undergo medical examinations. Instead, the insurer protects itself simply by imposing a general pre-existing condition exclusion clause in the policy contract. The one thing that is then necessary, however, is that the proposer should in such a case always be made aware of the existence and implications of the clause, because he might be unaware of it and as a result suffer possible prejudice.

In this case there was no evidence that the deceased had not been informed of the clause. A provisional ruling was therefore made against the complainant. We received no response, and closed our file.
March 2011