Tell all at application time!

- adapted from an article in Asteron's Insider magazine


In the real world, things can fall well short of this ideal. Discovery
of non-disclosure of relevant information occurs frequently when claims
are being processed.


People need to be fuily aware of the possible consequences of
non-disclosure. It may seem inconvenient at the lime, but in the event
of a claim it can cause unnecessary stress to the claimant and their
family when non-disclosure is uncovered.



Here is an example of a recent case, which is far from isolated.


An insurance proposal was accepted from a woman who had previously had
a long history of mental illness, depression and suicide attempts.


Questions asked in the personal statement were intended to prompt the
client to share information about such pertinent considerations, but
for a variety of reasons, perhaps embarrassment, they were not answered
at all.


The non-disclosure was only revealed when the woman, who is now
terminally ill with breast cancer, made a claim. Her doctor's notes,
needed to assess her prognosis, soon revealed what had not been
disclosed at the time of application. Technically, the claim could have
been declined on grounds of the non-disclosure.


In this case, the response was in proportion to the degree of non
disclosure. If it had been thought the client had sought the insurance
deliberately, knowing there was a pre existing condition, or that there
was a definite intent to deceive, then the claim may have been
declined. A considered approach was taken, and a balance between
fairness and compassion was achieved.


Consideration was given to how the application would have been
underwritten had all of the client's history been known. Underwriters
advised that after a deferral period, an extra premium would have
applied. Accordingly, the offer was made to reduce the sum insured to
reflect the cover that the premium paid, adjusted for the extra risk,
would have purchased. The client was delighted with this outcome. It
was a good outcome in a difficult case.



Unfortunately, non disclosure like this occurs from time to time across all products.


Typically, in cases like these, a payout may be reduced depending on
the circumstances - for example, a loading of plus 75 will usually
reduce a payout by half.


The disclosure information is intended to reflect the client's risk
profile at the time the policy is issued, not when the application is
first completed. Material information can emerge during the period
between application and issue, for example, previously undiagnosed
symptoms.


It is definitely in the client's interest to ensure their application
has been completed honestly and thoroughly. Any relevant changes in
health status that occur after the application has been made, and
before its acceptance must be disclosed.