Sometimes we get so swept up in the hustle and bustle of daily life, that we trust advisors so quickly and barely spend a moment to sit down and consider what we actually have bought and the amount paid away every month.

The policy document, along with your signed application, all form a contract you have with the assurer. Your contract outlines the coverage you are entitled to, as well as any conditions to that coverage. If you are an individual that does not read the coverage terms, two important decision tips is to consider what gets paid at claim stage and asking in-depth questions about the medical definitions.

Assurance Purchase Risks

Benefits paid at claim stage

Assurer’s alike market a number of health conditions covered under their policy of assurance. We know today that it is of little benefit to have 300+ conditions covered in terms of illness when one suddenly has a heart attack of a specific category definition and the claim is repudiated or paid at a substantially reduced amount.

Test the medical definitions

Definitions differ between assurance providers. Some providers provide a catch all, however when reviewing the catch all, one soon realise’s that it does not catch all and exposes you to a claim being declined.

Using the example of a permanent impairment claim we need to consider the permanent impairment definition. When doing so, we find one assurer requires “permanent impairment” to honour a claim for a heart attack while another does not.

The consequence of this to the policyholder is that it does not favour you because the assurer requires you to be permanently impaired following a heart attack. As you know this is not always the case, and as such the no claim is paid.

In another assurer we find impairment excludes specific heart attacks. How would you know when having a heart attack, which category or definition of heart attack it may be and then to be concerned whether the claim is paid. If not paid, you will need between R1,500 000 – R2,000,000 to take the claim to the Ombudsman for Life Assurance.

You can see now now that this is a high risk to your portfolio of assurance. The importance of the above is reflected in claims paid by assurer’s. The graphic below highlights that 48%% of all claims paid out to professionals, was for cancer and  cardiovascular disease causes.

To give the benefit to the assurer’s who do provide comprehensive and clear defined wording, many policyholders have been paid. However their are those that have not been paid on a claim and have needed to take legal action against the assurer. This process can take two to three years and cost you a fortune. Instead of risking that, review and understand the definitions when purchasing any form of assurance.

To make sure your portfolio serves your needs, we have spent thousands of hours in research of assurance contracts in order to determine the contract of least resistance at claim stage. Optimising your portfolio by taking a risk-based approach to purchasing assurance and investing will significantly reduce the risk it takes to achieve your objectives for business and life. 

Peter Šmanjak

Owner and Founder at Infinite Risk

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