CR46 Non-disclosure – payment of claim for premium waiver benefit on death of premium payer resisted by insurer


• Non-disclosure – payment of claim for premium waiver benefit on death of premium payer resisted by insurer, apparently on suspicion of non-disclosure; unreasonable delay.

This case illustrates that insurers are sometimes too ready to resist payment of a claim, in this case delaying for several years on a suspicion of non-disclosure.

The complainant was the owner and life insured of an educational savings policy providing life cover and an investment benefit. The policy commenced on 1 August 1998 and premiums were paid by the complainant’s father, a soldier in the SANDF. The policy provided an additional benefit of a premium waiver in the event of the death of the premium payer. The father died on 16 September 1999, and a claim was lodged in respect of the premium waiver benefit in January 2000.

Four and a half years later the claim still had not been paid. All that the insurer
told the claimant (repeatedly) was that they were still waiting for sick leave records from the SANDF and clinical records from the military hospital. The complainant also tried to get these records but was unsuccessful.

When we made enquiries the insurer advised that the deceased had died of kidney cancer/cardiac arrest, and that the date of diagnosis of the kidney cancer was not known. Until the date could be established the insurer stated that it could not admit the claim.

However, according to the doctor who had treated him at the time of death and who filled in the medical certificate in the claim documentation, the kidney cancer had been diagnosed in April 1999, some eight months after the policy commenced. It seems the insurer was nevertheless of the view that, as the policy was quite new, the insured might have known of the kidney cancer before the date of application, and it wanted to check this by obtaining records from the SANDF and military hospital, which had not replied to its requests. On application the premium payer had been asked certain health questions about his medical history and had answered “No” to all of them, including the questions about kidney disease and cancer. The insurer was thus resisting payment on suspicion of non-disclosure.

We scrutinised the documents and pointed out to the insurer that there was no exclusion relating to pre-existing conditions, and that there appeared to be no basis to suspect that any questions on the application form had been answered incorrectly; even if there were, the onus would be on the insurer to prove this. In our view the insurer had not been able to prove any material non-disclosure within a reasonable time, and the claim should be admitted and paid. The insurer agreed to pay all premiums.