Life Ombud: Non Disclosure

NON-DISCLOSURE

BACKGROUND

In June 2006 the complainant’s wife (“the deceased”) applied for and was issued with a R2 million life policy. She passed away in November 2006 as a result of lupus (SLE), an auto immune disease. In the period preceding the application for the policy she had consulted a specialist surgeon and a specialist physician, and tests had been done by a pathologist. After a series of consultations when the deceased had complained about hypertension, the specialist physician had suspected SLE in December 2005, and the pathologist’s tests, conducted earlier in 2006, indicated signs of polmyositis and SLE. While no definite diagnosis had yet been made, these features showed at least that SLE was suspected. When applying for the policy in June 2006, however, the deceased did not disclose either that the specialist physician had suspected SLE, or the results of the tests that had been done by the pathologist. All she disclosed was her hypertension.

The insurer repudiated the policy, relying on the abovementioned information and on a letter from the deceased’s doctor furnished at the time of her death. In the letter the doctor stated that the deceased’s symptoms in August 2006 “had been evolving over the previous six months”, which of course confirmed that the deceased would have had these symptoms prior to the inception of the policy. The insurer stated that had it known about the possibility of SLE, it would have deferred the deceased’s policy application until a definitive medical conclusion was reached. The complainant claimed, however, that the doctors the deceased had consulted before taking out the policy had never informed the deceased of the suspected SLE.

DISCUSSION

An insurer has the right to cancel a policy in the case of a material mis- or non-disclosure by a proposer.

We held that a reasonable, prudent person in the position of the deceased would have considered it necessary to disclose:

· that the specialist physician had expressed the opinion that she may have SLE, even if no final diagnosis had been made. In our view the probabilities favoured the specialist’s version that she had informed the deceased of her opinion;

· that the specialist physician and the pathologist had made it known to her that positive markers of SLE were found in her blood;

· that she had consulted a specialist surgeon;

CONCLUSION

We explained to the complainant that a definitive diagnosis of SLE was of itself not decisive. What we stressed was that the deceased’s failure instead to disclose such information as she had received would have alerted the insurer at least to the possibility that she may have SLE.

The complainant was not satisfied, and applied for leave to appeal against the decision. The Ombudsman was of the opinion, however, that there was no prospect of success in an appeal and declined the application.

CAUTION

If any questions are asked of a person applying for a policy (or for increased cover) it is vitally important that the following be kept in mind: -

* full and honest disclosure must be made in response to the questions;

* rather disclose too much, including disclosing undiagnosed symptoms;

* if unsure whether something should be disclosed – disclose it. The insurer will ignore irrelevant information;

* it may be necessary to refer to medical aid records or practitioner’s records as an aid to memory when responding to medical questions. There is no excuse for bad memory;

* applicants must take time to complete the form – sales people may want to rush the process – don’t let them.

The consequences for beneficiaries could be serious if policies are repudiated on death.