CR87

Funeral Policy – Section 59 (2) of the Long-term Insurance Act, 1998.

Background

The policyholder, a teacher, insured herself, her daughter, her two brothers and her sister-in-law. When the one brother died a claim was made but repudiated on the basis that his age in the application form was incorrectly stated which would have had an effect on the terms of the policy inasmuch as the amounts of premiums were age-related.

Discussion
Section 59 (2) of the Long-term Insurance Act, 1998 provides:
“2. If the age of a life insured under a long-term policy has been incorrectly stated to the long-term insurer, the policy benefits shall, notwithstanding subsection (1), be those which would have been provided under that policy in return for the premium payable had the age been correctly stated: Provided that if the nature of that long-term policy, or kind of long-term policy, is such as to render such arrangement inequitable, the Registrar may direct the long-term insurer to apply such different method of adjustment to the policy benefits of that long-term policy, or type of long-term policy, as the Registrar considers equitable in relation to the misstatement of age.”

Result
After intervention of the office a meeting between the complainant and the insurer was held when the necessary adjustments were made and the claim was met. The insurer agreed with our view that such an arrangement was not, in the language of the section, “inequitable”.

PMN
October 2005