Did You Know This About Life Insurance Payouts?

    November 4, 2014

    Did you know this about life insurance payouts?

    When a life insurance company pays out a claim without telling you beforehand the amount it will be paying and without stating that the payment is in “full and final settlement” of the claim, you are entitled to ask for more if you think the payout was not sufficient?

    Recently the Ombudsman for Long Term Insurance, Judge Ron McLaren drew an interesting conclusion regarding a life insurance claim payment.

    After the death of a policyholder, a certain woman claimed on the life policy. When assessing the claim, the insurance company requested medical records from the claimant because there was some suspicion that the health of the insured person had not been fully disclosed when the policy was taken out.

    Life Insurance PayoutsThe claimant could furnish no more information and the late policyholder’s GP refused to release the details, citing doctor / patient confidentiality as the reason.

    As the insurance company could not prove that there had been non-disclosure they simply had to pay the claim.

    Proof and Life Insurance Payouts

    Then the claimant said she wanted the interest on the payout amount as there had been a delay. She said she had run up a debt because of the delay, which had incurred interest. The assurer said the payment had been made in full and refused to pay anything extra.

    But the Ombudsman thought differently. He said, “An insurer is entitled to assess a claim by investigating it. If the insurer decides to raise a defence to the claim it has to provide cogent evident. So if the insurer wants to rely on a pre-existing exclusion clause or non-disclosure, it is up to the insurer to prove the defence.

    “Although the insurer said the claim was made as full and final settlement the complainant did not agree. It is true that the insurer might have paid with that intention in mind but the complainant did not regard it such.”

    The Ombudsman declared that interest had to be paid on the amount due to the late payment of the claim.

     

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    All info was correct at time of publishing