Non-disclosure In Life Insurance

Shane’s been unable to work, he’s had to sell his share of his flooring business and he’s selling his family home. He claimed on his income protection insurance with Partners Life, but they voided his insurance entirely because he had failed to disclose three unrelated conditions on his insurance application form.

The insurers said a combination of undisclosed sleep apnoea, high blood pressure and high cholesterol readings, meant Shane would not have been accepted for insurance in the first place.

Shane’s insurance form was 32-pages long and required a huge amount of current - and historical - medical information,  but it did not require either Shane or Partners Life to verify that information prior to sign up.

After Shane made his claim, Partners Life accessed all his medical records and found the undisclosed information.

Partners Life say they cannot allow clients to get payouts they would not have been entitled to had they made disclosure, and cannot accept “I forgot” or “I didn’t think it was important” as reasons for non-disclosure.

They say their applications are easy to understand, and they ask for health information that any client should know. Partners Life's decision to deny Shane’s claim was supported on review by the Insurance Ombudsman as being both reasonable and in-line with prudent underwriting practice.

Shane wants to see a law change so that innocent or mistaken non-disclosure like his case, is not cause for voiding insurance, and he wants the insurer to have to access and assess medical records prior to sign-up.  

Change may be underway though.

Consumer Affairs Minister Kris Faafoi has now asked for public submissions on an insurance law review which will include the non-disclosure issue, and other issues like unfair contract terms and insurers’ conduct.