Life Insurance Mistakes and Complaints
Every industry is prone to mistakes and complaints and South Africa’s life insurance industry is no different. There are several mistakes policyholders make and some by the insurance companies themselves. You can avoid some of the mistakes with a little bit of effort and information. So here we will have a look at some life insurance mistakes and complaints.
Some of the mistakes made are harmless while some have cost policyholders and beneficiaries a lot of money.
Policyholders have also raised their concerns and complaints against the life insurance industry.
Complains – Life insurance mistakes and complaints
Policyholder and life insurance customers have the right to lodge a complaint against a life insurance company if they feel that the company treats them unfairly.
A policyholder has the right to lodge a complaint against a life insurance company to the insurance Ombudsman.
The policyholder must submit the following to the insurance Ombudsman when making a complaint:
- Policy number(s)
- Policyholder contact details
- Insurance company
- Written summary of the complaint
- Supporting documents
- You can lodge a complaint in any language
A policyholder can file a complaint at no cost to him/her. Several examples of life insurance consumer complaints include:
- Bad and poor service
- Insurer won’t payout for a heart attack
- Unclear policy
Life insurance mistakes – Life insurance mistakes and complaints
There are also several mistakes that life insurance consumers make. You can avoid these mistakes. These mistakes include:
Naming an estate as a beneficiary
It is not advisable for a policyholder to name his/her estate as a beneficiary. This is because creditors have access to the death cover proceeds and a large portion of the payout will fall in their pockets.
Lack of secondary/contingent beneficiary – Life insurance mistakes and complaints
In the event that a primary beneficiary is dead, the death cover proceeds will go to the secondary/contingent beneficiary. If there is no secondary beneficiary, the proceeds are paid out the policyholder’s estate, which would be subject to taxes and creditors.
The best solution is to name at least two secondary/contingent beneficiaries.
Regularly checking the policy
A policyholder must check his/her policy at least once in three years. This allows the policyholder to be up to date with his/her policy and can update his/her beneficiaries.
So if the policyholder’s primary beneficiary dies or no longer depends on the policyholder, the policyholder must change the name of the beneficiary.
The correct type of insurance
Policyholders should make sure that the policy that they signed up for in the beginning is the one that they got.
So if the policyholder is not sure, he/she should consult a life insurance policy professional and should be given professional advice.
Inadequate cover
A policyholder should do the necessary calculations before taking a life insurance cover. So this ensures that his/her family receives a death cover pay-out that meets their demands and financial needs.
Buying knowledge
A person should not buy an insurance policy as if he/she is buying a commodity from a supermarket. If a policyholder is not careful enough when purchasing a policy, the death cover proceeds may be subject to tax laws and the payout to the beneficiary will be greatly reduced.
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All info was correct at time of publishing