The Main Reasons Why Your Claim is Declined

While insurance companies often pay a large majority of the claims they receive, there is no denying that things don’t always go to plan. As a result, your claim can be delayed or outright declined. To help you avoid this scenario, we have put together a list of the main reasons why an insurance company would decline or delay a claim.

1. You claimed for an excluded condition

An exclusion refers to a condition or circumstance that the policy doesn’t cover. For example, if you had a stroke before taking out a life policy or severe illness policy, claims resulting from stroke going forward may specifically be excluded. This scenario refers to a specific exclusion, which only applies to your policy. Another type of exclusion is a general exclusion, which applies to similar policies in general, such as life policies. An example of a general exclusion would be a two-year (24 month) suicide exclusion, whereby if the policyholder passes away as a result of suicide within the two-year period, the claim will not be paid out.

2. You submit a claim at the end of a waiting period

A waiting period refers to the period between taking out a policy and the time in which you can claim on that particular policy. Several life policies and funeral policies have a waiting period, and if a claim is made within this period, it will be declined. For example, there is a standard six-month waiting period for death by natural causes for most South African insurance companies, meaning you cannot claim for a death that occurs under these circumstances, such as a heart attack. Waiting periods apply to when the actual event occurred and not when the claim is made. So, if the life assured passes away within the waiting period and the claim is made after the waiting period, the insurance company will still not pay the claim. It is also worth noting that clients have the option not to sign some of the waiting periods should they disagree with the terms. It is, therefore, essential that you are aware of the waiting periods in the fine print of your policy.

3. The policy that you are claiming on has lapsed

Depending on the insurance company, either one or two missed payments will result in the suspension or cancellation of your policy. Some companies will offer a grace period if one premium is missed, suspend the policy if two premiums, and cancel the policy altogether if more than two premiums are missed. A claim on a suspended or lapsed policy will result in a decline.

4. Nondisclosure

A few claims are rejected each year due to the insured not fully disclosing important medical information, such as heart conditions, cancer, stroke, diabetes, etc. If you don’t disclose an existing condition or symptoms that usually indicate the presence of a symptom (e.g., an irregular heartbeat), the insurance company will decline any claims associated with the particular condition. It is crucial that you disclose ALL medical conditions and/or severe symptoms, even if you may think they seem insignificant. Sometimes, we find that clients think that since a medical condition happened so long ago, it is no longer relevant. For example, a woman must disclose if they suffered from the “baby blues”, even if she has no history of depression or anxiety or if it happened ages ago. If this mother passes away due to an anxiety or depression related matter, the insurance company will not pay out if she doesn’t disclose her baby blues. Remember, the more health information you provide, the better off you are likely to be at claim stage.

Other than those listed above, there are various reasons that an insurer may decline a claim. For example, claiming on benefits not included in the policy, the details on your policy not matching those provided at claim stage and the relationship between the main member and additional members being unclear. For this reason, it is often beneficial to consult with a professional financial advisor, who can check your current insurance policy and any exclusions, waiting periods, and any aspects of your cover that may lead to a decline. In doing so, they ensure that your claim will be quickly and efficiently processed when the time comes. For more information, contact PBA Financial services.

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