Help, my life cover claim was rejected

Your loved ones are waiting for a claim on your life insurance policy to be finalised, relying on the pay-out to fund their expenses after the funeral. When the news comes that the insurance claim has been rejected or declined, they are devastated and face an uncertain financial future. You can take steps to prevent this from happening to your loved ones by understanding the reasons why life insurance claims are rejected or declined and knowing how to dispute a life insurance rejection.

Common reasons for life insurance claim rejections

A life cover claim can either be accepted as a valid claim and the sum assured paid out in full, or it can be declined or rejected, or a claim pay-out can be reduced. When a claim is declined or reduced, the sum assured is either not paid at all or not paid in full as the insurance company believes that the policy terms and conditions have not been met. The insurance companies  are required to inform you of this and their reasons for declining or reducing the claim.

Good to know: South African insurance companies pay well over 90% of claims! In 2023, only 4.1% of claims were declined or rejected, so it is rare for claims to not be paid.

When life insurance claims are rejected or declined, the most common reasons are:

Material non-disclosure

This is when a material fact was not disclosed when requested. A material fact is one that would change the risk profile of the life assured and terms and conditions of the policy, including the cover, or sum assured, and premium amounts.

When you apply for life insurance and any increases in cover, you need to disclose information about your health and your occupation, including if you have or suspect you have a serious illness or chronic condition such as asthma, diabetes, high blood pressure etc. These factors affect your risk profile and if you don’t give your insurance company the information they request and answer their questions accurately, honestly and in full, you have not disclosed material information. This could mean that the cover you were granted at a particular premium did not accurately reflect your true risk profile. In other words, you are paying too little for the cover you have.

Insurance companies in South Africa reject or decline claims when there is non-disclosure, or they may adjust the policy and pay-out to reflect the actual risk, such as reducing the sum assured.

Top tip: If you have not disclosed material information speak to your insurance company or financial adviser to find a way forward.

The cause of death is excluded

An exclusion is when a cause of death is not covered by the policy. In general, all life cover policies exclude causes of death due to criminal activities, such as if you are killed while committing a crime. In addition, specific activities and conditions may be excluded, such as hazardous pursuits (bungee jumping, scuba diving for example) and pre-existing illnesses such as heart disease. Claim for an excluded event and the life insurance claim will be rejected or declined.

Top tip: Always tell your insurance company if you take up a hazardous pursuit.

Death is due to suicide that occurred in the waiting period

Life cover policies exclude death due to suicide for a certain time period such as 12 or 24 months. Claims where death is caused by suicide within this waiting period will be declined or rejected.

The policy lapsed due to non-payment of premiums

Premiums need to be paid every month for policies to be in force and claims considered. If premiums are unpaid for one month, there is a grace period in which to make up the unpaid premium. However, cover may be suspended and cancelled if a missed premium is not made up and if more than one premium is missed. If the policy lapses, claims will be rejected or declined.

Top tip: Talk to your insurer if you are struggling to pay premiums as there may be ways to reduce your premium and make your policy affordable.

Claims may also be delayed if the required documentation is not received in time, and if claims are made outside the claim time frame, which is usually 6 months, they may be rejected or declined.

Tips for preventing life insurance claims rejections

You can prevent declined or rejected claims by:

• Disclosing all material information – always take time to complete a life cover application and answer the questions truthfully
• Reading your policy documents thoroughly so you understand all the terms and conditions and can comply with them
• Paying premiums when they are due
• Ensuring beneficiaries know how and when to claim

Steps to take when your life insurance claim is rejected or declined

Your insurance company will inform you of their claims decision in writing and the reason for their decision. Take some time to read their decision if your claim is declined and see if you can resolve the issue, such as submitting any outstanding documents. If you cannot resolve your query, you can dispute the decision.

Disputing a rejected or declined insurance claim

Licensed South African insurance companies are required to follow a formal complaints resolution procedure to resolve any claim queries or disputes. Details of the process are available in policy documents and should be on your insurance companies  website.

There are three basic steps to formal complaints procedures if you are not happy with a claims decision or disagree with the insurance company's reason for rejecting your claim:

1. Inform your insurance company in writing that you wish to dispute the decision and why. You should send this to the complaints officer, whose details should be on their website.
2. The insurance company is required to review the decision and inform you of any new decision or changes to their original decision
3. If you are still unhappy with the decision you can approach the National Financial Ombud Scheme. They will assess and review your case and make a final decision.

1Life Insurance is committed to changing policyholder lives for the better

1Life Insurance is a licensed insurer and financial services provider and has been changing policyholders lives for nearly two decades. 1Life Insurance life cover policies can be tailored to your needs and budget, with cover from R300 000 up to R10 million. Policies are easy to take out, manage and claim. We have been voted an iconic brand 2 years in a row, in the 2022/2023 and 2023/2024 Ask Afrika Icon Brands Awards and have been recognised as South Africa’s #1direct life insurer in the annual Swiss Re Reports for 11 consecutive years! Our policyholders are always top of mind, and in 2023 and 2022, we had the highest net sentiment in the PWC SA Insurance Index Report.

When you make a claim on a 1Life Insurance policy you will be assigned a dedicated claims consultant to guide you through the process and help with any queries you might have.  All claims will be processed efficiently and quickly.

Funeral cover claims will be paid out in 24 business hours if all the correct documentation is submitted.

Life insurance pay-outs may take longer, depending on the nature of the claim, but we will attempt to process the Pay now death benefit within 24 business hours.

Pay now death benefit

Your family doesn’t have to wait for a life cover claim to be paid to pay funeral expenses. 1Life’s Pay now death benefit pays R50 000 that can be used to cover funeral expenses of the life assured on valid life claims.  

Disclose to avoid rejection

Life insurance policy claim rejections or declines are most often due to non-disclosure. Make sure you disclose everything when you apply for life cover, answer application questions in full and you can avoid a declined claim!