Take Action on Life Insurance Payout Shortfalls
Did you know that 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 life insurance 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 he was assessing the claim, the insurance company requested medical records from the claimant. They suspected that the owner of the policy had not fully disclosed the health of the insured person on application.
The 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.
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 insurer insisted they have made full payment and refused to pay anything extra.
Life Insurance Payout Judgement
But the Life Insurance 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 they had paid the full claim as 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 the insurance company had to pay the interest on the amount due to the late payment of the claim.
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All info was correct at time of publishing