Background

1. The complainant took out a funeral plan covering the deceased as a parent for a benefit of R10 000. The policy commenced on 1 October 2015.
2. The deceased passed away on 26 January 2018. The complainant lodged a claim against the insurer which was repudiated on the basis that the premiums were in arrears.
3. The relevant material terms of the policy contract were as follows:
   1. The premiums are payable in advance and are due on the first day of each month.
   2. There is a grace period of 30 days to pay the arrear premium.
   3. If any premium is not paid within the grace period, the policy will lapse and become null and void.
   4. Once the policy has lapsed, it may within 3 months of the date of lapse be reinstated with no waiting period except for the remainder of the original waiting period, if any. Arrear premiums may be recovered from the proceeds of the claim.
4. There was no dispute that the complainant failed to pay the premiums on the first day of November and December 2017. She only made a cash payment on 21 December 2017 but also failed to pay the premium in January 2018. She was notified about such failure on both occasions and was warned that “No claim will be acknowledged should the premiums be in arrears or if the policy lapses”.
5. The complainant, aggrieved about the insurer’s decision, approached our office for assistance.

Discussion

6. After considering the evidence before us, we took note that had the insurer enforced the provisions of the policy contract, the policy would have lapsed after the expiry of the grace period. The complainant would then have had a right to reinstate the policy with no waiting period and arrear premiums would have been recovered from the proceeds of the claim.
7. We held that the insurer had breached the provisions of its own policy. Such breach prejudiced the complainant because she was deprived of her right to reinstate it, which would have been more favourable for her.
8. The insurer’s contention that it had warned the complainant about the consequences of non-payment of the premiums was noted. However, the fact that it had not followed its own procedure as prescribed in the policy was regarded as material.
9. In view of the above, it was decided that the payment of the December premium should be construed as the reinstatement of the As the complainant also failed to pay the premium in January 2018, the grace period would apply from 1 to 30 January 2018. As the  deceased died on 26 January 2018, we held that she had died  within the grace period.
10. A provisional ruling was made directing the insurer to honour the claim and pay the benefit less the arrear premiums.

Result

11. The insurer decided to abide by our decision and paid the claim accordingly.