Your duty of disclosure (and why it matters)
The application process is your chance to get certainty from your insurance. That’s because the information you provide in your application will help the insurer decide what you’re covered for, and on what terms.
Comply with your duty of disclosure correctly, and you can generally be confident your cover will do exactly what you expect it to do if you make a claim.
Your insurer needs to know your risks
Imagine you bought a second-hand car that came with a dented bumper. When you go to insure it, your insurer will want to know if there’s any existing damage to the car – because they’re not going to pay to fix anything that happened before your cover started. It’s a similar story with life insurance.
When you apply for life insurance, you’re asked to complete a personal statement with a range of questions about your health, pastimes and medical history.
Your completed personal statement is designed to provide the insurer with information to allow them to underwrite the risk of you claiming. The insurer is looking to see if you're present a standard risk of claiming or does anything indicate that you have a higher risk including:
- Any pre-existing medical conditions
- Any dangerous pastimes or activities
- Any risky work-related duties
Your insurer needs to know this information because it impacts whether they can offer you cover, what the terms of that cover will be, and how much that cover will cost.
How does this give you certainty?
When you make an insurance claim, the claims assessor will review your medical records to ensure you’ve met your duty of disclosure and you’re eligible to receive a claim.
If you’ve told the insurer anything you know, or could be reasonably be expected to know, that may affect the insurer's decision to provide the insurance, and your claim meets the definition in your policy, your claim will generally be accepted.
What if you don’t disclose something?
Just because you don’t disclose something, that doesn’t mean your claim will automatically be declined.
If your non-disclosure isn’t related to your claim, and the insurer would’ve still covered you on the same terms if they knew about your existing medical condition, there may be no impact on the claim at all.
However, if the insurer wouldn’t have accepted your cover if they knew that information, your claim may not be paid (read why Steve’s claim was declined). Or if your cover would have been offered on reduced terms, you may receive a reduced payment.
What if it was just an innocent oversight?
There’s a big difference between innocently forgetting to tell your insurer about a medical condition and deliberately leaving something out you know will be relevant to your cover.
When assessing non-disclosure, an insurer will review each case on its merits to establish what is fair and reasonable – taking into account how the non-disclosure came about.
Insurers don’t decline claims lightly.
They’re there to ensure anything relevant to your cover is known from day one, so your policy is tailored to you and fairly priced.
You only need to disclose once
Once you’ve made the right upfront disclosures and your cover is accepted, your insurer can’t change what you’re covered for, or charge you more if your personal risks change.
In other words, you’ve locked in the value of your insurance from day one, and you can be confident there’ll be no surprises if you need to claim.
* Insurers can change premium rates but you cannot be singled out for rate change.