Susan Edmunds reports on Stuff.co.nz that
'According to the Insurance and Financial Services Ombudsman New Zealand needs a law change to stop people "ruining their lives" by not disclosing relevant information to their insurers. It is believed that many cases of a declined claim the insurance had been bought online and that insurers should be doing more to highlight to consumers what is required.'
My first thought was that the industry appears to be moving in the opposite direction. The use of more non-underwritten product makes claim decline for an existing medical condition much more certain than it would be for a fully underwritten product – even with the risks of non disclosure.
On the other hand, an adviser friend felt that more non-underwritten product was helpful. A person with a health condition that they did not wish to disclose (sometimes out of fear, forgetfulness, or embarrassment) that would be excluded would be focused on that by the exclusions explanation, instead of thinking that they could 'get away with it.
Either outcome depends heavily on how advisers discuss the duty of disclosure in fully-underwritten cases and how salespeople use non-underwritten products in comparison. Given the outcome is so predicated on likely practice I would be interested to hear from advisers on the subject. What do you think? What have you found from clients that have been sold non-underwritten product?
Click here to read Edmunds' full article.