Disclose all in policies

REMAINING insured with one company and not chopping and changing can pay dividends in the long-term because loyalty is rewarded.

REMAINING insured with one company and not chopping and changing can pay dividends in the long-term because loyalty is rewarded.

No loyalty exists with life insurance though. You get what you pay. There are no ex-gratia payments should your investments under-perform . When it comes to a payout on death, the company is likely to repudiate the claim if you did not disclose health issues.

The concept of loyalty used to be very different with short-term insurance. I was surprised when I received my household, all risks and motor policy renewal and found that my premium had escalated by 15percent because I had a few claims. My broker said the increase was due to the claims. When calculating loss ratio, companies only consider the past three years, he said.

Reassess short-term insurance on a regular basis. This doesn't mean switching policies each year, but many policyholders are financially stretched and this is one area where you could save money without buying an inferior policy.

Insurance companies feel that little loyalty exists between them and clients. Far too often, policyholders discover that they do not have the cover they thought they had. The short-term ombudsman's report puts a number on the amount of repudiated claims that his office was able to reverse. Last year, he intervened and settled R113 million in claims which had been repudiated originall y.

So, forget the loyalty aspect. It's about insuring correctly and disclosing every bit of information, no matter how trivial. This refers to both life policies and short-term insurance, particularly when you deal directly with an insurance company and not a broker. Complete the application form yourself and provided you disclose everything and insurers take on the risk, you shouldn't have a problem when you have a claim.

l The writer is financial advisor of Bryan Hirsch Colley and Associates. Email bryanh@bhca.co.za or call 011-880-4888.

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