CR332 Credit insurance Credit insurance – claim under credit life policy for retrenchment benefit

See too: CR, Retrenchement,

CR332
Credit insurance

Credit insurance – claim under credit life policy for retrenchment benefit – exclusion if insured not in full time employment for 6 months before notification date of retrenchment – not applicable on the facts of this case

Background

1. The complainant had an account protection plan policy, commencing on 23 September 2008, covering the outstanding balance on her department store account in the event of her death, disability or retrenchment. She had commenced employment with an accounting firm on 1 August 2011. On 12 December 2011 she received notification from her employer that she would be retrenched, with her last day of service to be 31 January 2012. In February she informed the store thereof. The store lodged a claim on her behalf, but it was repudiated.

2. In its response to our office the insurer defended its repudiation, citing the following exclusion clause in the policy:
“No benefit shall furthermore be payable for retrenchment claims if any of the following apply:

The insured has not been in full time employment for the 6 (six) months immediately before the notification date of retrenchment”.

3. The insurer stated that the complainant had only worked for 5 months when she was notified of her retrenchment.

Discussion

4. We wrote to the complainant, noting that she had commenced employment with the accounting firm on 1 August 2011, and asking her whether she had been in full time employment with any other employer in June and July 2011.

5. The complainant replied that she had indeed been employed full time in the accounting department of another company prior to starting her job with the accounting firm in August 2011, and she provided payslips for June and July 2011 as proof.

6. We put it to the insurer that the evidence showed that the complainant had been in full time employment for the six months immediately prior to the notification date of retrenchment. The policy did not require that the insured be in full time employment for six months with the same employer.

Result

7. The insurer accepted this, and paid the claim in the amount of R5156.48, being the outstanding balance on the store card on the date of notification of retrenchment.

SM
February 2013

CR332
Retrenchment

Credit insurance – claim under credit life policy for retrenchment benefit – exclusion if insured not in full time employment for 6 months before notification date of retrenchment – not applicable on the facts of this case

Background

1. The complainant had an account protection plan policy, commencing on 23 September 2008, covering the outstanding balance on her department store account in the event of her death, disability or retrenchment. She had commenced employment with an accounting firm on 1 August 2011. On 12 December 2011 she received notification from her employer that she would be retrenched, with her last day of service to be 31 January 2012. In February she informed the store thereof. The store lodged a claim on her behalf, but it was repudiated.

2. In its response to our office the insurer defended its repudiation, citing the following exclusion clause in the policy:
“No benefit shall furthermore be payable for retrenchment claims if any of the following apply:

The insured has not been in full time employment for the 6 (six) months immediately before the notification date of retrenchment”.

3. The insurer stated that the complainant had only worked for 5 months when she was notified of her retrenchment.

Discussion

4. We wrote to the complainant, noting that she had commenced employment with the accounting firm on 1 August 2011, and asking her whether she had been in full time employment with any other employer in June and July 2011.

5. The complainant replied that she had indeed been employed full time in the accounting department of another company prior to starting her job with the accounting firm in August 2011, and she provided payslips for June and July 2011 as proof.

6. We put it to the insurer that the evidence showed that the complainant had been in full time employment for the six months immediately prior to the notification date of retrenchment. The policy did not require that the insured be in full time employment for six months with the same employer.

Result

7. The insurer accepted this, and paid the claim in the amount of R5156.48, being the outstanding balance on the store card on the date of notification of retrenchment.

SM
February 2013

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