Following a week of public backlash, Momentum has adopted a new clause in its life insurance policies that will pay out to the families of victims of violent crime, irrespective of their medical history.
Numerous customers threatened to cancel their policies with the insurer after it refused to pay out a R2.4 million life insurance policy to a widow whose husband had died protecting her from a hail of bullets.
According to Momentum, the decision was taken to refuse the payout after it was found that the policy holder had not disclosed pre-existing medical issues at the time of signing.
The decision was challenged and taken to the ombudsman for long-term insurance, which ultimately upheld Momentum’s decision.
However, despite being on the right side of the law and justified in its position, the public criticized Momentum for its seemingly cold and callous response to the widow’s predicament.
Momentum offered to pay back all the client’s premiums, and also chose not to reclaim the R50,000 payout that was used to pay for the client’s funeral. However, the offer was rejected, with the widow threatening to take the group to court.
Responding to the public outcry, Momentum took the decision to make wide-sweeping changes to its life insurance policies, adding a clause that will enable the policy to be paid out in the event of death by violent crime, irrespective of a client’s medical history.
According to the group, this new policy change will be applied to all current and future life insurance policies, and will also be applied retroactively, including for the latest case.
“It’s clear from market reaction over the last two days that under certain circumstances, current industry practice creates the impression that insurers are looking for a reason not to pay a claim. Momentum is in the business of paying claims, and we have therefore taken the criticisms to heart,” Momentum said.
“We have created a solution that will pay an amount equal to the death benefit (limited to a maximum of R3 million) in the case of violent crime, regardless of previous medical history.”
The payout will be fully funded from Momentum’s profits, not client premiums, it stated.
Further, the payout will only take effect when death was a direct result of violent crime, it is not an addition to the normal death benefit, and the group still reserves the right to reject any fraudulent claims.
Don’t lie to your insurer – disclose everything
Momentum stressed the importance of full and honest disclosure when applying for insurance policies.
“The only time your health status matters, is when you apply for cover. This is when you need to share all your medical health information,” the group said.
“If your health deteriorates after commencement of the policy, there is no need for you to inform Momentum – your claim will be completely valid if the information provided at the start of the policy was accurate.”