This might come across as blunt…

When you apply for insurance the application process can be intense, and client often wonder why some of it is relevant. End of the day the insurers make there judgements based on risk factors and a tonne of statistics so taking on more risk doesn’t just mean that it impacts them, increased amount of claims can mean costs are passed on to their existing clients through increased premiums.

So whether you think something is relevant or not is not the issue, you need to disclose all the information they request otherwise it could end in heart break years down the track when it come to making a claim.

Non-disclosure is a bigger problem than you might think

The Insurance and Financial Services Ombudsman, Karen Stevens, has stated in an interview at least 10 percent of the complaints she receives every year are about insurance policies that have been rejected because the policy-holder hasn’t disclosed something they should have. That’s a fair amount of avoidable heart ache.

Although some people have deliberately left out information, most people unintentionally fail to disclose, either because they don’t realise it’s important or they’ve forgotten. Some common things that people don’t mention are pre-existing medical conditions, convictions, or claims that they’ve made in the past.

So why is disclosure so important?

When you apply for life insurance, the insurer will use the information you’ve given to decide the probability of you claiming on the policy. By looking at variables like your age, health, gender, and family medical history, the insurer will decide what kind of coverage you get and how much your premiums will be. This process is called ‘underwriting’. It’s really important to provide relevant and accurate information so that your policy is fair to both yourself and your insurer.

Many of us live with the comfort of knowing that when things go wrong we’ll have insurance to cover us and our loved ones. But suddenly finding out you’re not covered because you’ve not disclosed information can have devastating consequences. Not only could your life-changing claim be denied, but the insurer is under no legal obligation to refund the premiums you’ve paid or issue you with a new policy.

Disclose everything, and take your time tracing back through your medical history. You are better of having your application come back with a bunch of exclusions (and then have option to not take it), then hold anything back info that could see you throw away the premiums for nothing. This denies you a chance to financially plan for an event in other ways.

Top tips for avoiding non-disclosure

1. When you apply for insurance answer all the questions, even if you don’t think they are relevant. If you have a thought of “they probably don’t need to know that”… assume they do. Put it down, and if it is nothing your cover is not effected.

2. The law requires that you disclose all information that an underwriter would consider ‘material’ to the risk of insuring you. Even if your insurer isn’t asking the “right questions”, you have a legal obligation to disclose this information. Have a look at the application questions and ask yourself if there’s anything missing.

3. If in doubt – disclose! It’s better for your insurer to have more information than less, and you’d kick yourself if your claim was rejected because you hadn’t disclosed something you weren’t sure about.

4. If you remember something later that should have been included in your insurance application, ring your insurer and let them know.

5. Your doctor can provide you with a copy of your medical notes, should you need reminding about your medical history. This may mean going back through multiple past doctors if you have changed over the years and this is time consuming but if you can do it.

I spend a lot of time filling out these applications with clients at the risk that they may think that it is over-kill. And sometimes the questions don’t quite fit what we are trying to say, and we end up writing all over the application… but we disclose and that is what really matters.

I have had exclusions come back that made the client think twice, and decide the cover didn’t have enough value with all the exclusions and sometime I even agreed with them. That is business I have lost after spending a lot of time working out their requirements, but I plan on being in this business for decades to come so losing a few opportunities in the short-term means nothing if the other option would be that claims are denied in the future due to non-disclosure.