A Fin24 user wants to know if an insurance application could be declined because of a health reason. She writes:
I want to know if insurance companies have the right to decline applications for a policy because of health, like a policy to cover a sum of R125 000 from a retirement fund.
Petrie Marx, a product actuary at Sanlam, responds:
We would need some further information to provide a definite answer, but the following observations may be relevant to the question.
Firstly, insurance companies, in general, have the right to do underwriting on the basis of, amongst others, the health of the client, and may decline the application on the basis of poor health. Alternatively, a premium loading may be charged.
Reference is, however, also made to a retirement fund. We are not sure of the context of this reference, but in some cases, the insurance company which underwrites the group cover under a retirement fund, may offer an option to convert the group risk cover to an individual policy, without proof of good health.
In that case, the cover will not be declined, or in fact loaded, on the basis of poor health.
However, other general requirements still need to be adhered to for such applications to be accepted, for example, relating to minimum policy size, and underwriting for other aspects, such as possible high-risk occupations or hazardous pastimes.
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