“I recently lost my 20-year-old son but the insurance
company refused to pay my claim saying his name was spelt wrongly on the
policy.
“I have been paying my premiums for 30 years, but the
insurance firm dumped me when I needed it most,” said Tshuma.
She is not alone in this predicament.
There has been a growing trend in Zimbabwe where many
policyholders have failed to claim their benefits for various reasons.
Dumiso Dlodlo signed up for a funeral policy and enlisted
his mother as a beneficiary.
However, upon her death, he submitted her claims but the
assurer turned it down.
He was told that his brother, who had also enlisted his
mother separately as a beneficiary on his policy, had claimed the benefits.
“They said we can’t claim twice. But when we were paying
our premiums, they didn’t tell us that our mother was already covered.
“It’s a fraud! What will happen to the premiums that I have
been contributing for many years?” Dlodlo fumed.
“I am convinced that the insurer diverted my contributions
to buy assets.
“They invested the money but I got nothing,” he said.
According to the Insurance and Pensions Commission (IPEC),
the insurance sector’s combined asset base increased by 16% to $71,32 billion
between March 2021 and June 2021.
In 2018, a South African insurance group Momentum came
under fire for rejecting a life insurance claim after a man was shot and killed
in Durban.
The insurer rejected the R2,4 million payout because it
said the deceased had not disclosed the fact that he suffered from high blood
sugar.
Again, just over a year ago, Old Mutual faced a public
outcry when it refused to pay out benefits of a murdered policyholder because
he had not disclosed that he was diabetic.
Both companies were swayed by public opinion to effect the
payouts.
According to the Life Offices Association of Zimbabwe
(LOAZ), there are several reasons why life insurance companies sometimes deny
claims for families.
For instance, major misrepresentations of medical history
or current health problems are errors that significantly reduce payments and
may result in the cancellation of the policy before payment occurs.
Minor errors, such as a misspelt name or incorrect address,
may be used by the insurance company to deny claims.
The most common reason insurance companies refuse to pay is
lapsed payments.
LOAZ said most policies do have grace periods or other
payment protections in place that prevent the cancellation of the policy
without sufficient notice.
Whole life insurance policies often allow the policyholder
to use part of the value of the policy to pay premiums when a payment is
missed, giving flexibility for policyholders who are struggling financially.
Insurance companies often use unpaid premiums as an excuse
for slow payment of benefits.
According to insurance experts, not every death is covered
under every policy, and insurance companies act in bad faith when they limit
the type of death that is covered under the written policy.
Some companies will exclude death benefits for people who
engage in dangerous activities, or put themselves at risk on a regular basis.
There are only two causes of death for which an insurance
company can deny benefits.
The first is murder committed by the policyholder to cash
out the policy.
Second, suicide is generally excluded from all policies.
Also when the beneficiary is unclear or unavailable, the
insurance company will not make a payment on the policy.
“The policy must have accurate information about potential
beneficiaries, and those beneficiaries must be updated to reflect changes in
life status.
“For example, policyholders must change the name of their
spouse on the insurance documents or add the names of their children in order
to receive prompt payment,” according to Law Office of Matthew L Sharp.
Hippo, a South African insurance company, says before one
signs up on the policy, it is important to read the fine print of your contract
and make sure you understand what is expected from you.
Robson Dube, a pensioner, said there was a need for
insurance companies and policyholders to be open to each other.
“People need to be educated on some of these things.
Communication and openness is key,” he said.
LOAZ secretary-general Mavukeni Rufai urged policyholders
to pay their premiums to avoid their claims being rejected.
“But what is important is when you get a policy with some
life insurance companies, talk to them,” Rufai said.
“Communicate so that when there is a need to make
arrangements you can make the arrangements and they can talk to you and see how
best to make sure that your policy remains in the books.”
IPEC director insurance and micro-insurance Sibongile
Siwela said an insurance policy is based on an insurance contract where the
policyholder agrees to pay regular premiums for the term (duration) of a policy
in return for indemnification or benefits payment in the event that the insured
event materialises.
“The contract further states that if the policyholder fails
to pay premiums as per the terms and conditions of the policy, the policy
lapses and premiums are forfeited,” Siwela said.
“An insurance policy is different from a savings
arrangement where an individual deposits money with the objective of keeping it
and withdrawing it in the future.”
Siwela said a grace period is the period allowable after
the premium due date has passed in the hope that the policyholder will fulfil
his or her obligation of paying the outstanding premium during the grace
period.
The Insurance Act [Chapter 24:07], provides for different
grace periods allowable for a policy before it lapses.
This period is premised on the duration that the policy has
remained in force, she said.
“For instance, for funeral policies, this is further
expanded in the schedule in the same Insurance Act, which prescribes the period
within which the funeral policy remains in force where premiums have not been
paid,” she said.
Rufai said irrespective of what is happening in the
economy, the insurance needs remain.
“We need to make sure that we cover ourselves against
unforeseen circumstances,” he said.
“It doesn’t matter whether we have got a Zimbabwe dollar or
US dollar that we are using. It doesn’t matter.
“The insurance need remains because every day we have
babies being born.
“Once that baby is born, they need to be covered because we
don’t know whether the mother is going to be alive tomorrow or in two years or
five years.
“We don’t know whether the breadwinner is going to be
available to take care of that baby.
“The need for us to be covered remains.
“Similarly, the government will make sure that you don’t
travel on the road without an insurance policy for your motor vehicle.
“That’s a requirement. But when it comes to life,
retirement, funeral, those are your personal responsibilities.”
Rufai added: “You might disappear from the earth and leave
babies that are very young who might not be able to take care of themselves and
the fulfilment of insurance is to make sure that those people as long as they
are covered will be able to look at life and proceed and be able to do great
things in their lives.
“Same thing on retirement, it is a certainty as long as you
are alive.
“You will one day reach the age of 60 and you might not be
able to work for yourself.
“So in the 40 years that you have been employed, it’s a
requirement that you set aside some money that you can spend when you retire.
Use that money to fund your livelihood and pay for
medication because when you get to that age you are prone to suffer from many
diseases.
“All those medical solutions require funding but if you
have not set aside something to look after you when you retire you might have
real problems.” Standard
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