As a policyholder, you have the responsibility to disclose certain information to your insurer. But did you know that in terms of your Policyholder Protection Rules and the Long-Term Insurance Act, your insurer must give you certain information, too? Here are the six important things an insurer must do to make sure you understand and are happy with your life insurance policy.
1. Give you a policy documentYour policy document has all the details of your contract with your insurer. The type and amount of cover is specified, with all the terms and conditions. You should receive your policy document within 30 days of accepting your policy. If you don’t, contact your insurer and ask for a copy.
1Life posts or emails policy documents, so keep the document in a folder and backup the file, or in a safe place.
2. Tell you what your policy coversYour insurer must tell you what kind of policy you have – for example life cover or critical illness cover – and how much you are covered for, also called the sum assured.
This information is disclosed in your policy document and schedule and should be on annual review letters from your insurer. When you call your insurer, they will give you this information.
In addition, your insurer must tell you if and when you can increase your cover or change your policy and how to do this. So, for example, what you need to do if you want to cancel your policy in the cooling off period (first 31 days), or if you want to increase your sum assured or add a benefit such as disability insurance.
If the policy cannot be changed or the sum assured increased, your insurer must specify this.
Terms and conditions must be clear and in readable size print
There are a lot of financial terms in insurance, but your insurer needs to give you information in plain language, with definitions of important terms, so you understand exactly what the policy covers. 1Life explains common insurance terms in simple language in this blog.
3. State what your premiums are, when they are due and how they may increaseInsurers must tell you what your premiums are – for example R250 a month – and when they are due. If you are paying by debit order you must sign an authorisation for this. This is usually done on the application form, but you can also give the details over the phone.
Your insurer must also tell you when your premiums increase – usually either on the anniversary of your taking out the contract, or on another specified date. All reputable insurers will contact you a few weeks before your premium increases to let you know the new amount and when it is due.
4. Itemise general or specific exclusions, waiting periods, premium loadings and other conditionsYour insurance company must make it clear if there are exclusions or waiting periods that apply to your policy.
There are some waiting periods and exclusions that apply generally to similar policies – for instance, a life policy does not pay out a death claim due to suicide in the first two years. All of these details are included in policy documents.
Specific exclusions or loadings are conditions that apply only to your policy, such as an exclusion for claims for specific pre-existing conditions or a loading (higher premium) due to a serious health problem. Your insurer must tell you these exclusions or loadings before you accept the policy, and you must agree to these conditions before the policy begins.
It’s very important to note that details of these exclusions and waiting periods cannot be hidden in fine print in the contract. The Long-Term Insurance Act and Policyholder Protection Rules require that they are made clear, in understandable language and in readable size print. If you need a magnifying glass to read the terms and conditions of your insurance policy, beware.
5. Tell you how to claim, how claims are paid, and when a claim would be rejectedInsurance is a promise that when a certain event happens, the policy will pay out a certain amount. Your insurer must tell you in advance – when you take out the policy – when a claim would be valid, how you claim, who to contact in the event of a claim, and what documents you may need. If there are time limits on claims – for example you must claim within three or six months of the event – these must be clear.
6. Give you the info you need to contact the companyInsurers have to give you their full details – company name, registration number, physical address and contact details - and their Financial Services Provider number. This tells you they are registered with the regulators, are in business in the country and agree to all the applicable Acts, regulatory requirements and rules.
They need to tell you how you can contact them – for example by phone or email.
Apart from general details, all long-term insurers in South Africa must give you details of how to contact their compliance officer, and how to complain and escalate your complaint if you are not satisfied with the response.
You’ll know you’re with a reputable insurer when these details are clearly visible on your policy document, schedules and communications.
The bottom lineThese disclosures give you, the policyholder, protection and assurance that you are insured with a good insurer who will make sure you understand and are happy with your policy, so that when it comes to claims time there are no surprises.
Your right to these disclosures and information is protected in the Policyholder Protection Rules and Long-Term Insurance Act. If your policy or insurer doesn’t give you these details, you’ll need to contact the Financial Services Conduct Authority who regulate long-term insurers. And before you take any more insurance, make sure you are with an insurer who meets these requirements.