Why is it important to be honest when applying for life, disability, severe illness or funeral cover?

It is generally accepted that the person applying for insurance knows more about the risk to be insured than the insurer. For this reason, the Long-term Insurance Act compels applicants to honestly disclose all information likely to influence the judgment of the insurer when determining appropriate policy terms and premiums.  

​Information generally regarded as material includes your medical history, state of health, family history and lifestyle. Having all the facts at their disposal enables the life insurer’s underwriters to determine the exact risk you pose to the insurer. Read more What does it mean if cover is fully or partially underwritten?

​​A life insurance company is therefore within its rights to not pay out a claim and declare your policy void, should it come to light that you were dishonest or that you failed to disclose important details when you took out your policy. 

If you are in doubt about whether information is important or not, rather disclose it and let the underwriters decide whether it is material. 

Medical assessment

Depending on the information that you disclose, a life insurer may request a medical assessment to determine the severity of a condition you have.  

If, for example, you mention that you suffer from chest pain, the insurer may require an assessment to determine whether you are at risk of suffering a heart attack.  

If you disclose that you are scheduled to go for any medical investigations within a couple of weeks, the company may delay issuing a policy until you have the results. 

If your medical condition or lifestyle choices are considered a material risk, the life insurer may offer the cover on different terms such as a higher premium or exclusions on disability cover or severe illness benefits.  In a small percentage of cases, the applications are declined. 

While it may therefore seem tempting to keep quiet about ailments or pending medical investigations, should you claim for a condition that was subsequently diagnosed as a result of the investigations, the claim might be declined.   

Rather be honest and if your cover is declined, then you and your loved ones can at least plan ahead for the financial impact should something happen, or you can take out cover for accidental death only.

What happens if your cover is declined?

Even if you do not qualify for comprehensive life cover, you can apply for accidental death cover, which only pays out if you die as a result of an accident. 

There is also a growing range of cover for life, disability and critical illness, available to people living with the human immunodeficiency virus (HIV). South Africa was the first country to introduce life cover for people living with HIV in 2001. 

When applying for a long-term insurance policy: 

• Always complete the application form yourself, particularly the questionnaire on your medical and lifestyle history. 
• Provide detailed information on your state of health and medical history, as well as that of your parents and siblings, as some health risks may be hereditary. 
• Disclose medical conditions that occurred in the past. Many conditions, such as cancer, may go into remission for many years, only to reappear at a later stage. 
• Be honest about your smoking and drinking habits. 
• Disclose dangerous recreational activities such as rock climbing and deep sea diving. 
• If your occupation involves risky activities, you need to disclose these. Examples include flying aircraft and dealing with weapons. 
• Shop around for risk cover and compare benefits and terms as well as premiums. The industry is very competitive and small differences can result in significant differences in premiums.  
• Some life insurers will expect you to inform them if your circumstances have changed drastically over time, even if you have been insured for a number of years. Most insurers, for example, expect you to let them know if you change jobs, start smoking or participate in hazardous activities. This is likely to increase your premium since the life insurer now runs a much higher risk of having to pay a claim due to you dying or injuring yourself. If you don't tell your insurer, there is a chance that you or your beneficiaries will receive a reduced pay out, or no pay out at all.  
• You should also inform your insurer if you have a reduction in risk. If, for example, you stopped smoking for the required minimum period and are prepared to have a test done to prove this, you are likely to see a reduction in premiums.   
• Familiarise yourself with premium guarantee periods – the premiums could be guaranteed for life or for a defined period only (and then be subject to a review). The review of premiums at the end of a guaranteed period may also be subject to different conditions. Make sure you are familiar with these conditions. 

Your life insurer may ask you how you earn a living and what proportion of your job can be defined as manual work, supervisory work, administrative work and travel. 

The terms of your policy may require you to inform your life insurer how you earn a living and if your occupation or your duties at work change.