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Insurance: the importance of full and accurate disclosure

The whole basis of the relationship between the parties to a life and health insurance contract is founded on the legal doctrine of uberrimae fidei which requires both parties to exercise the utmost good faith in their dealings with each other.

Providing full disclosure

From the client’s perspective, the obligation is to provide full disclosure at time of application and not to hide any relevant information. The insurer’s obligation is to treat the client fairly in all its dealings in managing the client’s policy, and especially at claim time.

Full and accurate disclosure is a necessary part of the health insurance application process to ensure that the insurer is in possession of all relevant information at the time of underwriting assessment. This is important, as non-disclosure may lead to a claim being declined and / or the policy being declared void and terminated.

The health insurance application process

To assist with the assessment process, insurance underwriters may also request medical notes from an applicant’s doctor in order to gain a clearer picture of any past or current medical issues. They will base their underwriting assessment on the medical information to which they have access, following which they will either advise that the cover is accepted on (i) standard terms, or (ii) via an offer of terms which may feature exclusions of pre-existing conditions or premium loadings.

Experience shows how important it is to provide detailed disclosures at application time, not scanty ones. When underwriters are forced to make decisions based on limited or ambiguous information, they will invariably take a conservative approach and place exclusions on cover. When such exclusions or other special terms are placed by the underwriter is the time that a good insurance adviser will aim to secure the best possible terms for their client.

Helping you get the help you need

It is for this reason that I always encourage my clients to provide me with as much additional information as possible so that, where necessary, I can challenge an initial underwriting assessment that is over-zealous and unfairly restrictive. When made aware of any such additional information that was not initially available, insurers are often willing to amend their initial underwriting assessment to one which is more favourable for my clients.

This is part of the service that we always strive to provide: it’s what we do.