What happens if an insurance company refuses to pay out on a policy because you've failed to disclose a medical condition that could lead to a repudiation of a claim, even if it is totally unrelated to the cause of death?
This is what has happened to Renei Kruger after her 32-year-old husband Brent Kruger was gunned down in gang crossfire after dropping his young daughter at a creche.
Old Mutual has denied the life insurance claim on the grounds that Kruger had an undisclosed medical condition.
The Ombudsman for Long Term Insurance, Judge Ron Mclaren explained the legalities on this matter. He made it clear that he may not talk about the specifics of the Kruger claim at this stage as it is an ongoing case he is dealing with.
He explains why nondisclosure could lead to a policy cancellation, but where a death occurs unrelated to the non-disclosed medical condition, the medical condition should not be a factor in denying the claim.
If the applicant does not disclose the previous diagnosis and the policy gets issued, and six months down the line the insurer discovers that there had been a nondisclosure ... The insurer would in law unquestionably be entitled to cancel the policy.— Judge Ron Mclaren, Ombudsman
If the insurer did not become aware of that nondisclosure and six months after the policy had been issued, the insured person dies, and the legal position is that nothing has changed... The intervening death does not change that result.— Judge Ron Mclaren, Ombudsman
He adds that it appears the death in the shooting incident was not related directly or indirectly to the alleged nondisclosed medical condition.
Whether the insurer died as a result of a motor vehicle collision or heart attack... it makes no difference. And the underlying principle can be expressed very crisply by saying - It is not a requirement that the nondisclosed information must relate to the insured event.— Judge Ron Mclaren, Ombudsman
Listen to the Ombudsman below:
Insurance assessor Sipho in Johannesburg, called into the Eusebius McKaiser Show and spoke to Gugs Mhlungu about the issue.
He believes Mrs Kruger does have a case.
My understanding in terms of disclosure is that the insurance company - when they want you to disclose - obviously they need to insure you and take the risk according to whatever you have disclosed.— Sipho, insurance assessor Johannesburg
He cites examples like being HIV positive or a smoker as increasing the risk factors for the insurers and the premiums will be different.
However, if I don't disclose to the insurer that I am a smoker, and I've had the policy for the past 5, 10 or 15 years, and then I get involved in a car accident, the result of death has got nothing to do with me smoking. I died because of a vehicle accident.— Sipho, insurance assessor Johannesburg
But if death was as a result of smoking, and you had never disclosed, then the insurer has the right to decline, he says.
He says the family should pursue the claim.
Listen to what Sipho has to say: