The Single Biggest Reason Why Your Life Insurance Claim Could Be Rejected

Are you sitting on the fence about taking out life cover? Worried perhaps that the insurer is going to find every reason, under the sun, to not pay out? There’s always that one nightmarish story floating around the office watercooler, isn’t there: “Did you know that Thandi’s husband passed away and the life insurance company is refusing to pay. It’s criminal. These life companies just take our premiums and then conveniently don’t pay when it suits them”. The perception that insurance companies are out to steal policy holder’s money is something that’s been around for ages. Is it a fair rap? The truth is that most life insurance claim rejections come down to just one thing:


When you think about it, a life insurance policy is a simple agreement. In exchange for a premium (normally a recurring monthly payment), the life insurer is going to cover the very real risk of you passing away.

You select how much money you want to get paid out to your beneficiary, when you die, and the life insurer, in exchange for a series of premiums, will do a deal provided that:

  • You pay your premiums on time
  • You have been truthful in your dealings with the insurer from the get-go

If you both stick to your end of the bargain, then it’s been a good bit of business for everyone concerned. In exchange for a couple of hundred Rand a month, your family has the peace of mind knowing that they are financially taken care of when you pass on, and the insurer gets a regular payment it can invest with all the other premiums it collects (that’s how insurance companies make their money).

But what if you’ve failed to disclose an important bit of information at application stage? Could the insurer hold that against you at claim stage? What exactly are the implications of non-disclosure?

The implications are dire

Failing to disclose absolutely everything to the life insurer, at application stage, means the insurer didn’t have all the information on hand to make the best possible decision and calculate the correct monthly premium according to the risk on your life.

They are going to feel slightly “disgruntled” about that and could decide to repudiate your claim (not pay out the proceeds of your life insurance policy to your beneficiary).

Answer your health questions honestly

Health non-disclosures are generally the big ones, and you should be careful, when taking out life cover, to make sure that you have been honest and forthcoming with all your personal health information. Don’t think for a second that something you think is completely irrelevant is not vitally important information to the insurer. Tell them about every health issue you’ve had for as far back as you can remember. If you had a back problem 20 years ago, mention it. If you smoke cigarettes on the weekends, when you’ve had a couple of beers with the boys, mention it. No fact is too small to leave out.

Maybe it costs you a little extra in the way of premiums each month, but at least you can rest assured knowing that you haven’t told any “white lies” or “half-truths” that could come back to haunt you (or worse yet, jeopardise your family’s future).

Be very clear about what you do for a living

What you do for a living has a big impact on the life insurance rates you will be offered. That’s why life insurance companies ask the question. Someone working underground in a mine all day is at far higher risk than an administration clerk, who spends the day in an air-conditioned office filing legal paperwork. It’s not only your nominated occupation that’s important, how you spend your 8 hours at work everyday is also important to insurance companies.

Quick example:

You might be a sales representative who is on the road all day seeing clients (100% of your time can be attributed to travel), while another sales representative could be a tele-sales agent who only travels to work and back (100% of the time can be attributed to admin).

Both are sales representatives, but one is certainly a higher risk than the other.

Be very clear about what you do for a living and if you decide to give up your day job to train Bengal Tigers, that call to your insurer is one you might want to make.

Risky activities

If you build model aeroplanes in your lounge on the weekends as a hobby, that wouldn’t be considered a “risky activity” in the life insurer’s eyes. Jumping out of an aeroplane every weekend, well that’s another story altogether now.

Put yourself in the life insurer’s shoes for a second. If you were collecting a premium for insuring someone’s life, you would want to make sure you are collecting the correct premium for the associated risk.

People who jump out of planes every weekend are more likely to die than people who don’t jump out of planes.

Smoking and drinking habits

You can get caught out big time if you are lying about smoking and how much you drink. If you start smoking and the insurer has you down as a non-smoker, you have an obligation to let the insurer know. Your policy wording will stipulate that the onus is on you to let them know when there has been a change in your lifestyle or habits, that might influence the policy risk.

Insurance companies are not looking for ways to duck and dive. Insurance companies are well within their right to ask a simple question though: “Why didn’t you tell us about that?”

That’s a question you want to avoid being asked, after you’ve paid thousands of Rands in premiums.

Need a quote? Click here.

Until next time.
The Wise About Life team

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