A waiting period is the period during which you cannot claim on your policy despite the policy being active and your premiums paid.
Life insurers impose waiting periods on all or some benefits to prevent policyholders from taking out a policy when they know they are going to claim – this is known as anti-selecting against the insurance company.
An example of this would be if you knew one of your parent’s was terminally ill and you took out funeral insurance that included cover for your parent in order to ensure his or her funeral was covered.
As waiting periods reduce anti-selection, they will also reduce the premium you pay for your cover.
Waiting periods may apply for a period after you take out a policy – or after you claim. In the case of funeral insurance, waiting periods apply after you take out a policy. In the case of disability cover providing an income protection benefit, the waiting period applies from the time you are disabled – the event that allows you to claim.
Funeral insurance policies typically have waiting periods during which time you cannot claim for deaths arising from:
There is typically no waiting period for deaths from accidents.
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If you miss paying a premium on your funeral policy, you may enjoy a grace period. In terms of the policy protection rules under the Long Term Insurance Act, you are entitled to at least 15 days grace. Many insurers give you longer, but you need to check the terms of your policy. If you are still unable to pay the outstanding premiums at the end of the grace period, your policy may lapse. You may be able to reinstate it when you can again afford to pay the premiums but be aware that the life insurance company may impose a new waiting period. A new waiting period may also be imposed to any increase in cover – for example, if you increase your cover from R40 000 to R50 000, you may have a waiting period on the additional R10 000 in cover. |
BEWARE OF NEW WAITING PERIODS