The last thing you want to hear when you submit a life insurance claim is that it is declined.
Nobody takes out life insurance without the expectation that it will be paid out when they claim. However, claims are rejected sometimes, leaving large holes in family’s budgets but you can avoid this if you do everything right from the time when you apply for life insurance.
Life insurers should pay out claims for income protection, critical illness and disability quickly, but complications and misunderstandings can cause delays or even mean that claims are declined, Simphiwe Mhlongo, underwriter at Bidvest Life, says.
Policyholders play a crucial role in ensuring the likelihood of payouts and Mhlongo gives these tips to boost your chances of a smooth, successful life insurance claim:
#1: Be fully transparent when taking out life insurance
This is called ‘full disclosure’ and it entails giving accurate, complete information, including sharing any pre-existing conditions, such as high blood pressure, lifestyle habits, like smoking and past medical history, like any major surgeries.
Mhlongo says full disclosure ensures that your claim will not be denied due to missing or inaccurate information. Therefore, if you do not understand any of the questions, it is important to ask for clear explanations before you answer.
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#2: Pay your premiums in full and on time
If you miss any monthly premium payments, your cover will lapse, meaning that claims will not be paid. You will also have to make up the missing payments before your cover will be reinstated and this will put extra strain on your finances going forward.
If you face financial difficulties, ask your insurer about a Freeze Option and whether you qualify for one. If so, you will be able to temporarily suspend your life insurance policy and its associated premiums for a set period (usually 3 or 6 months) while still maintaining your cover. This ensures that your policy stays active when you need it most.
#3: Make sure you understand all the terms and conditions
When you take out life insurance, it is critical that you understand exactly what you are and are not covered for and if you chose the best waiting period for your needs, Mhlongo says.
According to Bidvest Life’s 2023 Claims Report, the number one reason for non-payment of income protection claims was that policyholders tried to claim during their waiting period, the number of days you must be sick or unable to work before your policy will start paying out.
For example, if you chose a waiting period of 30 days and an illness lasts for 21 days, you would not be able to claim but, if you chose a 7-day or 14-day waiting period, you would be able to claim.
Understanding all the other clauses, such as which illnesses are covered under income protection, means that your claims are more likely to meet all the criteria for being paid out.
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#4: Keep your details up to date
It is vital that you update your details regularly and let your insurer know when your life circumstances change, like if you get married or divorced, have a baby, move or change jobs. This helps to ensure that your cover remains relevant to your current needs and risks and goes a long way towards having made full disclosure before you need to claim.
#5: Partner with a financial adviser
Financial advisers have the skills and knowledge to ensure that you have the right cover for your needs, risks and budget. Mhlongo says the first thing an adviser is likely to tell you is that your number one priority should be to insure your biggest asset: your ability to earn an income.
In addition, an adviser will help you to identify what cover you need, understand how your policy works, how to navigate the claims process and ensure that all of the finer details are in place, to ensure you do not face delays or potential declines when it’s time to claim.
“Understanding your life insurance policies, being proactive about keeping everything up to date and consulting with a qualified financial adviser means that your claims will be quicker, easier and more likely to be successful, giving you peace of mind that your financial future is secure,” Mhlongo says.