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The good, the bad and the downright ugly. Who belongs in the life insurance hall of shame?

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Rachel Hardwick

October 9, 2020

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Oh dear...

One of the biggest reasons people are afraid of death is because nothing’s guaranteed – other than the actual dying part. People are not only uncertain of what lies beyond but what could be left behind, too. Life insurance can at least help people feel certain that when they die, their loved ones aren’t left up the creek without a paddle. Sadly, whilst instances like this are rare, sometimes people who thought they were covered, found out that wasn’t quite the case when they needed to claim. (or their loved ones, more accurately).

Unfortunately, some insurers act like sharks, not the cute but annoying baby shark, do-do-do-do but big teeth bitey ones.  We wanted to make it clear, that we don’t – even though we do look a bit scary and are sometimes misunderstood.

One thing’s for sure: we didn’t get into the life insurance game to make friends. We’re here to shake the whole thing up, making the industry fairer and ensuring you guys are getting the best possible deals. That’s why we’re looking at some of the worst tactics employed by life insurance companies. Ready to have your eyes opened?


SHARK TACTIC #1

Claiming  ‘non-disclosure’

Ironically, claiming on a life insurance policy can feel like prising your money from someone’s cold, dead hands. Non-disclosure is a common tactic used by life insurance companies for paying claims. When it comes to your medical history, you’re likely to be asked more awkward questions than feels strictly necessary. This can be a little overwhelming, so you can be forgiven if a small detail slips your mind. Accidents happen, after all.

However, making a mistake or forgetting something crucial can cost you big time. If a life insurance company finds you intentionally lied, and you know it, then fair enough. However, it’s another thing when companies exploit a small mistake or look really hard to find a tiny little nugget to show you’re guilty of (without even meaning to) misrepresentation.

In 2018, South African life insurance company Momentum decided to hold on to 2.4m rand, rather than pay out to the family of Nathan Ganas, a man who failed to disclose he had high blood sugar. Did he fall into a diabetic coma and die? Nope. He was shot and killed in a botched carjacking. Nothing to do with his condition.

The news of this withholding broke to public outcry and the resulting PR disaster brought Momentum to a screeching halt. Despite all this, it’s almost impressive how long Momentum dug their heels in. While in the end, they did begrudgingly pay out to Nathan’s widow, they did it through their own profits rather than Ganas’ premiums.


SHARK TACTIC #2

Good, old-fashioned discrimination

Over the last few years, we’ve been having more productive public conversations about mental health. As part of this, people who feel that they’ve experienced discrimination due to their mental health have been given a platform and started that conversation. Unfortunately, many mental health issues aren’t fully understood or can be classified inappropriately, which can lead to people feeling and being marginalised. This means that many providers are unwilling to provide life cover for people living with mental health issues.

This was covered in anarticle in The Guardianin 2018. The story found some examples where people struggling with their mental health were denied cover. One particular example was a survivor of the 7/7 London bombings who was treated for PTSD. Some people also saw their premiums skyrocket after they attended a handful of grief counselling sessions. It’s important to remember that life insurance is a safety net for people who want security for both themselves and their loved ones. Why should people be denied that simply for asking for help?

At DeadHappy, we go against the grain. Rather than excluding suicide from our policies for people with mental health issues, we did it for everyone. It’s subject to a yearly review, but more often than not, we can lift the exclusion after a year. This means that we can accept nearly all mental health conditions at standard prices, without the need for additional info.


SHARK TACTIC #3

(The PPI of the future) Mis-sold policies

Mis-selling is the boldest of moves carried out by the worst life insurance companies. It’s like being sold a luxe designer waterproof jacket when all you wanted was an umbrella.

‘Whole of life’ policies have always been controversial. As the name suggests, they last the whole of your life, with the promise of a big pay out at the end. Unfortunately, this gives life insurance providers a huge advantage.

‘Whole of life’ policies are usually subject to regular reviews, meaning that premiums can be raised, and benefits slashed. Insurers are partly at their liberty to do that, but often customers speak up to say that they weren’t properly informed.      

Want to know more about a ‘Term’ policy vs a ‘Whole of Life’ then you may enjoy reading our ‘Is Life Insurance a Good Investment’ piece too.


So what is ‘Properly informed’?

What does that mean? The person who sold the policy may have mentioned a reviews process, but maybe in passing, or the info is just chilling out in the small print somewhere. That’s how companies can cover their backs against allegations of mis-selling.

What we’re getting at is that the worst life insurance companies don’t make the effort to ensure people understand every aspect of the policy. And that’s wrong.  So what are people supposed to do when faced with massive premium hikes? Either they stop paying and their investment has been for nothing, or they continue to be exploited. It’s a sad dynamic that quite a few life insurance companies are happy to live with. Not at DeadHappy though.

At DeadHappy, we’re transparent because we’ve got nothing to hide. We keep it simple so people understand exactly what they’re getting. Our pay-as-you-go life insurance helps you stay flexible, and we make it as easy as possible for you to change it.

Go on then, i’ll give it a go

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