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Policy wordings
Monday, February 24, 2014 - 03:16
A kind word

The New Year, consumers is a good time to review your medical aid and insurance policies. “Yet,” says Sarah Slabbert from the Plain Language Institute, “many people will once again sign up for insurance products that aren’t aligned to their requirements. And when it comes to claiming, there is a good chance that they will be bitterly disappointed when they discover they aren’t covered for the things they thought they were covered for.”

Unhappy consumers, who feel their claims should have been paid when they weren’t, often criticise insurance companies, and these experiences breed distrust in the industry.
She says that in some instances consumer complaints to the Short of Long Term Ombudsman over non-payment or poor service are justified, but in others, they stem from consumers’ poor understanding of their benefits and the conditions of their policies.
“When signing up for an insurance product, it is important that consumers read and understand the insurance contract. It is essential that you understand what you are buying, or, in the case of a telephonic sale, what you have bought, and know what your rights and responsibilities are. It is the only way to avoid unpleasant surprises,” she says. “If you don’t understand something, it is your right to ask the insurer to explain it to you.”
Slabbert believes that consumer education continues to be one of the biggest challenges facing the insurance industry. Although various pieces of legislation in recent years oblige the financial services sector to provide consumers with information in plain language, consumers are not yet sufficiently aware of their right to insist on clear and understandable communication.
“If consumers are unsure of what benefits they are entitled to, or don’t understand any of the terms and conditions, they should, and they have a right to, ask for clarity. If they don’t get it, they should move to another provider that can give them the clarity they need,” she advises.
At the same time, consumers should carefully research insurance products and providers, and ask more questions. For example, do you know what the difference is between a life policy and a funeral policy? Or what a pre-existing medical condition is and what this exclusion means for your cover? Do you understand what excess is and how it works? Do you know when your cover starts and ends? On the other hand, consumers also have an obligation to be upfront and honest with their insurance providers.
“Consumers should not omit important information that could affect their premium or their cover. Failure to disclose important information, such as your medical condition, is one of the most common reasons why insurance companies repudiate claims. For example, a car insurance provider might stipulate that a vehicle must have a tracking device. If the car is stolen and it’s found there was no tracking device in the car, the insurance company will, in all likelihood, not pay out.
“Similarly, lying about your smoker status on your life insurance policy could affect the pay-out. It is important for consumers to understand this,” she says.
She urges consumers to be thorough – and honest – when reviewing their insurance for the New Year. This means carefully evaluating the level of cover they need, doing some homework to understand the differences between the various solutions available, and finding an insurer that “speaks their language”.
“This will help to ensure that you have adequate cover for your needs and could even save you some money. For instance, you might find that you are paying for cell phone cover when your phone could be covered more cheaply as part of the insurance on your home contents. You might also find that you could be paying less on car insurance if you move to an insurer that is better geared to address your specific needs.
“Most importantly, make sure that you thoroughly understand the benefits you are entitled to and the conditions of your cover. If you don’t understand what you are buying, look for a provider that has tested the clarity of its policies with consumers. This offers the assurance that you are dealing with a company that is committed to communicating in clear language, and you will be able to make an informed decision that will hopefully not result in an ‘insurance let-down’ in the future.”
 

Copyright © Insurance Times and Investments® Vol:27.2 1st February, 2014
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