Avoiding 'non-disclosure' - Utmost Good Faith
When making an application, it is absolutely vital that all questions are answered fully and to the best of your knowledge.
If you make an application for insurance and knowingly withhold material information ('material' means information which an underwriter would wish to know about in assessing an application) you are at risk of making your policy invalid, and being uninsured, with no payout in the event of a claim, except perhaps for a return of premiums; if your policy is made null and void. A claim may even be refused if the undisclosed known material fact was unconnected with the cause of a claim. If you are unsure if a fact is material or not, you should disclose it anyway. |
The underlying principle is called utmost good faith, or uberrimae fidei in the Latin. This is the principle under which you have an obligation, when making an application for any form of insurance, to fully disclose any and all material facts of which you are aware.
You must not assume that the insurance company to which you are applying will automatically write to your doctor for your medical history. You must disclose of all known material facts in your application.
After applying for insurance, but before it has actually started:
It is also very important that you disclose (the onus is on you to volunteer the information) any material changes in your circumstances, for example, any health or occupational changes, or taking up a dangerous hobby, between applying for insurance and before the insurance contract has started, any such or other changes must be must be disclosed to the insurance company.
The following are examples of notifiable changes, about which you would need to inform your insurer if they happen before your policy actually starts:
- Having, or expecting to have, consultations with a doctor, clinic or hospital
- Treatment as an in-patient or out-patient
- Medical scans or tests
- Expected changes in occupation or occupational duties
- Taking up residence overseas
- Taking part in hazardous sports or pastimes
The above list is not exhaustive, and if you are in doubt as to whether any change in your life is a notifiable change, you should notify your insurer anyway. If you fail to notify your insurance company of any notifiable changes that take place before your policy starts, you are at risk of invalidating your insurance, which means that the insurer will be legally entitled to refuse to pay a claim and to cancel your policy.
After a policy has started:
Some life insurance companies, upon receipt of an application for insurance that was made 'online' will write to you, asking you to confirm your application details and to make any necessary alterations if any details are incorrect. But not all companies do this and in any event, it is important that an application be completed correctly.
(We complete all applications on behalf of all of our clients to ensure there is no 'non-disclosure'.)
