COVID-19 and the Lockdown Part 1
This office continues to resolve complaints, while working remotely. We have not yet received many complaints related to the COVID-19 virus or the Lockdown. We are however receiving enquiries from policyholders and claimants related to these events.
We obtained some of the information contained in this newsletter from insurers, re-insurers and other organisations. There is no doubt that there will be more questions and issues as the impact of the virus and the Lockdown unfolds and affects and disrupts people’s health, employment and finances as well as the health care system and business operations. We will cover further topics in Part 2 of the newsletter.
This newsletter deals mostly with risk policies. We realise that there will also be significant impact on investment components in policies. At this stage we urge you to contact your intermediary to discuss any concerns you have in that regard. If you do not have an intermediary, then contact your insurer.
What suggestions can we offer policyholders in general?
During this time, we suggest that you read through your policies. Also go through your annual statements to make sure that you know exactly for what you are covered. Check that the beneficiary nominations are still relevant and advise your insurer should you wish to change a beneficiary. If you have become unemployed, inform your insurer as it may affect your benefits.
Ensure that your premium payments are up to date. If your circumstances have changed you should check that your stop or debit order is operating correctly to ensure that your policy stays in force.
If you are concerned about how COVID-19 will affect your life insurance policy and/or insurance claim, or whether you are covered for the outbreak or its effect, it is important to contact your insurer as early as possible. That gives your insurer the best chance of assisting you and providing the necessary information. For any disputes that may arise, you can contact the Long-term Insurance Ombudsman.
Be careful of scams related to coronavirus (COVID-19). These scams take many forms and could involve insurance policies. Scammers are sophisticated, opportunistic and will try many things. They are also very likely to target the vulnerable. To help protect yourself you should: reject offers that come out of the blue; beware of adverts on social media channels and paid for/sponsored adverts online; avoid being rushed or pressured into making a decision and do not give out personal details (bank details, address, existing insurance/pensions/investment details).
What happens if I cannot pay my premiums on my risk policy during this time?
You should contact your insurer as soon as possible to discuss the problem, either directly or through your intermediary. Insurers have not adopted a uniform approach to this problem.
The three basic approaches by those insurers that are providing relief seem to be:
Premium holidays in some form or another, with or without cover.
Extended grace periods (the time granted to pay an outstanding premium) during which time cover continues despite no premium being received
Allowing premiums and cover to be reduced for a certain period and reinstatement of cover after that period without any underwriting
If a life insured dies as a result of the virus will the life or funeral policy pay out?
This will depend on the policy provisions. We have not seen policies with exclusions in respect of the Corona virus. However, if the life insured dies of natural causes in an applicable waiting period (most funeral policies have waiting periods) the claim could fail in terms of such a restriction. There are exclusions in some policies, e.g. some pre-existing exclusion clauses, on which an insurer might rely to decline a claim.
We take this opportunity to remind readers that if an insurer wants to determine if an exclusion clause is applicable to a claim it is not the obligation of the claimant to provide the medical evidence. It will be up to the insurer to obtain the medical evidence. In this regard see our Practice Note https://www.ombud.co.za/download-attachment/3166.
Will my credit life policy pay out if I lose my employment as a result of the impact of the virus and the Lockdown?
Once again this will depend on the policy provisions and the particulars of the claim. There is no single answer to this question. The loss of employment would have to fit into the terms and conditions of the policy. It is more common to have retrenchment cover but there are some policies that provide for loss of income. There are also some insurers that may choose to provide benefits outside of the strict provisions of the policy. However, not all credit life policies have retrenchment or loss of income benefits. The claimant should read his/her policy and also contact the insurer to find out what the policy covers.
If a claim does not qualify in terms of the policy, it might be advisable for the policyholder to contact the credit provider to find out if there is debt relief for which he/she can qualify. The claimant could also explore other avenues such as the Unemployment Insurance Fund and other relief initiatives by the Government.
Will my disability benefits be payable if I cannot work due to contracting COVID-19?
If you have income disability benefits and you are so ill as a result of the virus that you are unable to work, you will have to complete a waiting period (if applicable) in terms of the policy before qualifying for a benefit, unless the insurer chooses to waive the waiting period. The other policy provisions will also still be applicable.
If a claimant is asymptomatic after testing positive for the virus and has to be in quarantine it is unlikely that he/she will qualify in terms of the more common definition of income disability benefits, unless the insurer chooses to relax strict compliance with the policy wording.
The provision of medical and employment evidence to prove a disability claim may be problematic during this time. A claimant has to prove his/her claim and there may well be delays and other difficulties in obtaining medical evidence and reports during this time when medical personnel will be fully occupied with containing the effect of the virus. Obtaining evidence from employers for purposes of proving a claim may also be difficult.
Insurers will have to be “agile” to adjust to these circumstances keeping in mind the expectations contained in the communication by the FSCA.
For more information about the office and its activities, please visit our website: www.ombud.co.za Third Floor, Sunclare Building, 21 Dreyer Street, Claremont, Cape Town, 7700 Private Bag X45, Claremont, Cape Town, 7735 (Sharecall) 086 010 3236 (T) +27 21 657 5000 (F) +27 21 674 0951 (E) info@ombud.co.za Ombudsman Central Helpline: 0860OMBUDS / 0860 66 2837
Disclaimer: Ombuzz is published for general guidance only. The information it contains reflects our policy position at the time of publication. This information is neither legal advice nor a definitive binding statement on any aspect of our approach and procedure. The case studies are based on actual complaints we have dealt with. Should you wish to subscribe to this newsletter please email cbruce@ombud.co.za
