The case in which Momentum initially declined to pay Nathan Ganas’ widow his life insurance because he did not disclose that he had blood sugar, has highlighted the vital importance of making full disclosure when you apply for cover.

But don’t assume that if a broker helps you apply for cover, the disclosures are his or her problem.

The outcry over the fact that Ganas did not die of any blood sugar-related illnesses, but was gunned down at his Shallcross, Durban home in a botched hijacking, saw Momentum create a benefit for violent deaths and pay the widow out.

But the case highlights the fact that insurers can and will deny your claim if you fail to disclose all the information they ask for because it prevents them from assessing the risks properly.

If you think applying for life or disability cover through a broker protects you if you fail to disclose important information, think again.

Nedbank’s Isaac Manicus says in the latest newsletter of the Ombud for Financial Services Providers there is a misconception that using a broker protects you from misrepresentation or non-disclosure of key information.

“It’s essentially a two-way street. The insurer has obligations towards you, and you, in turn have an obligation to make sure the broker and insurer get full and honest representations.”

Manicus says that insurers have an obligation to tell you which questions are important for them to calculate risk. The financial services provider may not reject your claim if the non-disclosure would not have had a material effect on its ability to determine your risk.

So, what is your responsibility?

Be honest

The cover insurers provide is completely dependent on the disclosures you make, so Manicus says honesty is your best policy. 

If you are not totally honest the insurer reserves the right not to enter into a contract with you. If it finds out when there is a claim that you were not honest, it can cancel the contract and return the premiums, leaving the claim unpaid.

Don’t filter out information, for example that you’re an avid bungee jumper or that you enjoy deep sea diving off the coast of countries at war as these may be red flags for an insurer, Manicus says. When you claim, an investigation will reveal if you have failed to disclose any information.

Question your broker

Ask your broker which information is material to the insurer for your risk assessment, and answer all questions honestly, Manicus says.

Withhold nothing from your broker, and the broker should also not withhold anything from the insurer.

Melani Winkler, assistant Fais ombud, told Money there have been cases where policyholders have disclosed everything, but the broker has failed to disclose the information to the insurer. This is especially prevalent with medical scheme brokers, she says.

In these instances, you would be able to turn to the ombud. 

Understand the job and responsibilities of the broker

Winkler says your broker is obliged to provide all the disclosed information to the insurer service provider, who is in the best position to decide whether it is relevant or not. Brokers should not cross the line and underwrite the policy on behalf of the insurer.

"Furthermore, there is a duty on the broker to not only disclose the importance of medical underwriting questions in determining the risk posed by the potential client, but also to inform you of the extent to which the medical disclosures are to be made."

Take all underwriting and annual review processes seriously

If changes happen in your life, you are obliged to let your insurer know, Winkler says.

"Where there is a change in the risk, like a change in employment (from being office bound for example, to working in a factory), change in smoking habits, or the addition of risky hobbies like skydiving, you have to disclose this information to your broker," she says.

Winkler says if your broker is receiving an advisory fee on an ongoing basis, he or she is required to do annual reviews to ensure that the policy and the benefits provided remain relevant to your needs and circumstances.

At these reviews, your broker should ask you if there have been any changes in your circumstances so that he or she can advise your insurer and you if the policy is no longer appropriate.