Life Insurance in South Africa – A Compendium – A perspective from the Office of the Long Term Ombudsman for Long Term Insurance: Judge PM Nienaber and Professor MFB Reinecke.

Disability and Impairment Claims in South Africa

Disability and impairment insurance aims to provide financial support to individuals affected by illness or injury, compensating for loss of income or specific health events. Policies can offer lump sum payments or monthly benefits for temporary or permanent disability, and may be individual or group-based.

Types of Cover:

• Traditional disability cover is for those unable to work due to illness or injury, with benefits varying by contract.
• Impairment cover pays out for defined medical conditions and impairments, regardless of the insured’s ability to work.

Risk Management:

Insurers manage risk through waiting periods, exclusion clauses (for pre-existing conditions or risky activities), premium loading for known health issues, and minimum duration requirements for conditions. Non-disclosure of material health information can lead to claim repudiation.

Claim Assessment and Review:

Claim eligibility depends on evidence meeting policy requirements. Insurers may use expert teams for assessment. Impairment and critical illness claims are simpler to assess, while occupational disability claims are more complex, involving legal and personal considerations.

The insured bears the burden of proof and cost of medical reports for claims. Insurers must act in good faith, inviting additional evidence if needed. Independent medical opinions, if required, are the insurer’s responsibility.

Policy discretion, such as “in the opinion of the insurer,” must be exercised reasonably. Reviewing bodies can assess decisions for reasonableness, potentially substituting their own decision or referring it back to the insurer.