Die breaking the law? Don’t expect a life insurance payday
The National Financial Ombud Scheme has warned that life insurance claims can be denied if the insured was involved in criminal activity
Image: File photo.
The National Financial Ombud Scheme (NFO) has warned that life insurance claims can be denied if the insured was involved in criminal activity at the time of their death.
According to the financial watchdog an insurer refused to pay out a life policy because the death occurred during an alleged crime. Police evidence showed officers were attempting to arrest the man when he allegedly seized a police officer’s firearm and tried to fire it.
He was then fatally shot by other officers at the scene. With no evidence contradicting the police account, the insurer concluded the death resulted from criminal conduct and rejected the claim under a clear policy exclusion. The NFO agreed that the decision to deny the claim was justified.
“Our office agreed that the insurer was not contractually obliged to pay the claim, and the decision to decline it was justified,” Denise Gabriels, Lead Ombud of the Life Insurance Division of the NFO, said.
“Insurance exclusions are not hidden traps. They are fundamental to how insurance works. For policyholders, understanding exclusions is just as important as knowing what is covered. By reading carefully and asking questions, policyholders can ensure that they are adequately protected and avoid unpleasant surprises when it matters most".
According to the NFO, the most common insurance exclusions include:
- Criminal Acts: Claims arising from illegal activity, including actions taken while under investigation, prosecution, or conviction.
- Hazardous Pursuits: High-risk activities such as skydiving, scuba diving, or mountaineering.
- Pre-existing Conditions: Health issues diagnosed before the policy began, such as heart disease, diabetes, or asthma.
- War and Terrorism: Losses caused by war, terrorism, or civil unrest.
- Intentional Acts: Deliberate self-harm or suicide, usually within the first 12–24 months of a policy.
Denise Gabriels stressed that knowing what is excluded from a policy is just as important as knowing what is covered.
“When taking out cover, ask questions about exclusions you don’t understand. Keep copies of all disclosures you made during the application. Read the policy document carefully and make sure you understand its contents".
"If anything is unclear, contact the insurer or adviser for clarification. If the policy does not accurately reflect the information provided during the application, request that it be corrected".
mthobisi.nozulela@iol.co.za
IOL Business