Mom lied, so daughter denied R6m life insurance payout

A court has ruled against a woman who had claimed her late mother’s R6m life insurance policy after it was discovered that the deceased had exaggerated her monthly income to the insurer.

Judge Mahendra Chetty in the Durban high court dismissed Viantha Naidoo’s claim to her late mother’s insurance policy. The insurer, Discovery, had flagged it for misrepresentation in 2016 after the death of Naidoo’s mom, Sandra, from natural causes in January 2016. 

Discovery claimed Sandra lied in her application that she was earning R35,000 as a front-end controller at Shoprite in Chatsworth when in fact she was being paid a gross salary of R5,500, with a take-home of R3,600. Her gross income alone would have restricted her cover to R1.2m or be rejected, according to a witness from Discovery. 

The company also said Sandra failed to disclose that she had taken another policy with Old Mutual on the same day she did with Discovery. This compromised both companies and meant that she was over-insured.

The court said Sandra inflated her income to R70,000 in her application to Old Mutual and the company paid R3.3m to Naidoo when she claimed for her mom’s death. 

“I am satisfied that the plaintiff [Naidoo] has failed to prove its case,” Chetty ruled.

“The first defendant, Discovery, was induced into the contract by a material representation and non-disclosure by Sandra Naidoo and is consequently entitled to void the contract and refuse to pay the death benefit stipulated therein to the nominated beneficiary.”

Naidoo also forfeited her mother’s premiums as a penalty imposed by Discovery. 

She claimed that her mother earned more money as a sales representative for Avon, a cosmetics company, and that she was also earning dividends from a company that the family ran, but could not prove this in court. A manager from Avon disputed that Sandra was part of their team. 

Discovery produced evidence in the form of Sandra’s payslips and bank statements to prove that she had exaggerated her salary, a point that was also confirmed by a human resource manager at Shoprite.  

“In essence, Discovery’s position is that had the deceased properly disclosed her salary from Shoprite Checkers, it would not have offered the life cover amount that it did – [and] that the misrepresentations induced it to enter into the agreement on the conditions it did,” said the judge. 

Sandra’s insurance application forms were presented in court and it was discovered that on both occasions she was assisted by an agent who was being investigated for being part of a syndicate that fleeced insurance companies. The syndicate would make deposits into the bank accounts of the over-insured person to make it seem they were earning enough to qualify for more cover.

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