Avia Ustanny, Business Reporter

Have you really looked at the premium payment grace period information specified in your life insurance policy? Do you even know what a 'premium payment grace period' is?

What about other conditions in the policy? Do you understand them?

You should, for if the worst were to happen and you neglected to make premium payments during the time specified, your beneficiaries may not receive the proceeds because your life insurance policy had lapsed.

Yes, you had only missed a few months and was planning to make a lump sum payment, but life intervened.

Or, consider that after having an accident in which you received injuries which will prevent you from ever working again, your relatives visit the insurance company with medical certificates and policy contracts only to find that they are unable to collect benefits because of what the company describes as "non-disclosure of a pre-existing condition."

Cancer patients

If you already had cancer when you purchased the policy, your relatives will not be able to collect on your death, even if you lived 15 years after buying the insurance and paid your premiums along the way.

If you are a skydiver, you should admit this to your agent so that the risk can be properly assessed and priced.

Local life insurance companies say that rejections of claims are much less common than perceived, and that only two per cent of the death/living benefit claims are rejected.

But, in the area of health insurance, the rate of rejection is higher.

Sagicor Life Jamaica Limited, the largest insurance company, says the clams it rejects tend to relate to unclisclosed pre-existing illnesses excluded by the policy.

Misrepresentation

Tanya Miller, Sagicor's group marketing head, says claims will not be honoured if the insurance contract was based on invalid data, if documents are missing, if death or disability has occurred within the probationary period - which can be as long as two years after a policy has been purchased - or if misrepresentation or criminal activity has been noted in relation to the claim.

Garfield Coke, unit manager of Sagicor's Utopia Branch in New Kingston , says however, policyholders have less to worry about than we think or the anecdotal evidence appears to imply.

Unsuspecting victims

"The belief or sometimes perception that insurance has pitfalls or fine print to catch unsuspecting victims is really a myth," he tells Sunday Business.

"This concept dates as far back as the 'world is flat' theory," he said, a little exasperated.

In basic terms, Coke explains, a claim on an insurance policy is governed by the terms of the contract and, as such, the claim will be paid in direct stipulation to the policy document.

Where death/living benefits are concerned, the requirements for processing claim must be first met before the disbursement of the cheque. This is usually in the policy contract; proof of death; identification of the beneficiaries; a claimant statement and in the case of accidental death, the police report.

You are also required to present the 'pink slip' or medical report, which is needed for proof of death, and valid identification by the beneficiary - whether drivers licence, passport, or national ID card.

Claimant statement

The claimant will also be required to fill out a one-page form, called the claimant statement, for the insurance company's permanent record of claim.

In the case of a critical illness, health, disability or dismemberment claim, Coke notes, the requirement is the medical report and the claimant statement.

"The concern then with claims is not the dishonouring, but the time delay of securing a medical or police report," said Coke.

"The satisfying of the claim process will result in the honouring of a claim," said the Sagicor executive.

Disclosing information

He suggests that it is the responsibility of the insured to ensure all claims are honoured by fully disclosing information when applying for an insurance contract, and "just speaking the truth to ensure the risk consideration was accepted by the insurance company."

In addition to fraudulent claims or non-disclosures, rejections occur where the policy contract had genuinely lapsed and, to a much lesser extent, misrepresentation of the information submitted.

Even then, Coke says, claims are sometimes paid in the interest of good customer relations even when there is a 'suspicion' of a disqualifying factor since the burden of proof rests entirely on the insurance company.

avia.ustanny@gleanerjm.com