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Following the decision by Momentum to backtrack on an earlier refusal to pay out a claim for slain policy holder Nathan Ganas, due to an unrelated cause of death, consumers have had questions over whether they are fully covered by their insurance policies.
Ganas was gunned down in Durban in March 2017, in a violent robbery. He had failed to disclose to the life insurer that he had elevated sugar levels.
The financial services and insurance group announced on Tuesday it had created a policy to pay out an amount equal to the death benefit, limited to a maximum of R3m, in the cases where violent crime caused a client's death.
These would be paid out regardless of previous medical history. Treasury's deputy director general Ismail Momoniat has welcomed the Momentum decision, stating that government would continue to work with the Financial Sector Conduct Authority to engage with the industry to review whether current standards are going "far enough" to treat customers fairly.
Here are some tips from insurance experts to ensure you're adequately covered.
Long term insurance (life insurance and funeral cover)
Full disclosure is "non-negotiable" when people apply for life insurance and funeral cover, according to CEO of the Financial Intermediaries Association (FIA) Lizelle van der Merwe. She advised policy holders to contact their financial advisors or insurance brokers and undergo a thorough policy review, as people's needs and lifestyles change.
Van der Merwe said the FIA, which represents advisors and brokers at an industry level, maintains independent intermediaries and is best placed to consider policy holders' needs.
She added that Momentum had decided to create a new policy to pay out Ganas's claim in the case of violent crime, but the fundamental issue is that the client didn't fully disclose his health status.
"It almost allows you to get away with that," Van der Merwe commented, adding that the decision had "cost the industry".
Short-term insurance (car, house, household contents)
The short-term industry has a different pricing structure and disclosure rules to long-term products, said Nico Esterhuizen, general Manager for Insurance Risks at the South African Insurance Association (SAIA).
Life insurance and funeral cover clients are required to disclose items of a material nature on the day of the contract and they will be covered, regardless of changes to personal or health circumstance, according to Esterhuizen.
But clients with car, house or other short-term insurance have to inform their providers of changes to their conditions.
For example: car insurance policy holders are required to disclose if there are changes to the driver, the location where the car is parked and what the vehicle is used for.
Short term insurers, according to Esterhuizen, assess the relevance of the conditions before rejecting or accepting a claim.
According to some policies, vehicle users are required to ensure their tyres are in good condition, but if a policy holder's car is smashed while they are parked, insurance companies will still pay out the claim, Esterhuzien said.
He also advised clients to regularly assess their insurance products and inform providers of material changes.
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