CR157 Non-disclosure – exclusion
Non-disclosure – exclusion – non-disclosure of suicide of other family members – passage of time – effect of.
We recently had this request from a concerned policyholder:
“I wonder if you would be able to give me some advise? I read an article in the local paper about non-disclosure, and became a bit concerned.
Years ago (in a few cases more than 30 years ago) I took out life insurance policies. At the time both my elder brother and my father had committed suicide, and feeling embarrassed (since I knew the broker personally), I put a different cause for my father’s death.
Now in hindsight, I realise that this was foolish. Does this mean that my policies could be jeopardised? Should I attempt to establish which companies I had given incorrect information to (I don’t know which companies I did) in which case if I do notify then could I lose benefits that may have accrued over the years?”
We responded as follows:
“I have taken the liberty of discussing your query with an experienced re-insurer.
The question is whether the non-disclosure of the suicide of your father and elder brother, notwithstanding a pertinent question by the insurer on the very topic, should be regarded as material to the assessment of the risk by the insurer at the time the policies were issued.
And the answer is: Yes. If the information had been disclosed at the time the insurer (having deemed the information to be important to it – for otherwise it could not have posed the question) would probably have followed it up with a further series of questions to determine whether you yourself was a special insurance risk i.e. whether there was a deficiency in your mental or emotional make-up which might render you more likely than others to commit suicide or injure yourself. Depending on the outcome of that line of enquiry the insurer might have decided that the usual waiting period of two years in respect of suicide would be adequate or it might have loaded the premiums or it might have imposed a permanent suicide exclusion or it might have refused to insure you at all.
If the non-disclosure happened fairly recently, it might well have jeopardised your policies. But it didn’t. It happened 30 odd years ago. During those 30 years you did not commit suicide and you did not suffer from any psychological imbalances that could give rise to a claim on the policies. It is therefore questionable that if the enquiry referred to above had been pursued at the time it would have elicited information that would have caused the insurer to decline to insure you. Our view is that on grounds of equity a claim should not be declined in these circumstances. The non-disclosure, after all, given its reason, namely, to avoid the social stigma of a suicide in the family, was not intended to be deceitful or designed to defraud the insurer.
All things considered the reinsurer’s advice, which seems to be eminently sensible, is not to stir things up. In view of the passage of time they suggest that you let matters rest where they are.”