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Updated 04 September 2013

Why telling the truth really, really matters

There are times when a “thumb-suck” might be appropriate. But when you’re filling in an application for insurance, that’s not one of them.

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There are times when a “thumb-suck” might be appropriate. But when you’re filling in an application for insurance, that’s not one of them.

I had two interesting cases recently which again highlight the importance of full disclosure when applying for any form of insurance.

The first emerged when we were reviewing an existing policy for a client, one that had been done by her previous advisor. It was clear that her stated income and occupation were incorrect. How, we asked her, had this information found its way onto her policy?

Her reply: “My broker told me to give him a thumb-suck!"

We pointed out the danger of this kind of approach to her – would she like the insurance company to do a thumb-suck when assessing her claim?

The second case had to do with a client applying for income replacement cover. In the application process, it emerged that although she did not currently have back pain, she was seeing a physio for treatment (mainly preventative, she said). She was reluctant to disclose this on the application form for fear of a back exclusion – apparently she had even been advised by her physio not to disclose this.

We pointed out the risk to her: if she failed to disclose the information and it later emerged at claim stage that she had been seeing the physio, then the company was within their rights to repudiate any claim.

She did the right thing and disclosed. The insurance company called for X-rays, which showed a degenerative disc. The cover was granted with an exclusion. While this might seem harsh, at least she knows where she stands, and what is not covered. At claims stage, there will be nothing that she has tried to hide.

You can’t afford to thumb-suck when it comes to filling in insurance forms.

(Gregg Sneddon , Health24, March 2011)

(Picture: man filling out forms from Shutterstock)

  

 
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