Life Insurance non disclosure – don’t let this happen to your family at claim time

Article courtesy of the Dom Post – note the comment from the Insurance Ombudsman.

The family of slain cyclist Frank van Kampen will be able to stay in their home after an insurance company backtracked on its decision not to pay out on his death.

Mr Van Kampen’s insurance company, ING New Zealand, told his partner Jude Pauwels last Thursday that it would pay out only half Mr Van Kampen’s life insurance, saying he had voided his policy by failing to tell the company he had a minor bowel condition.

The company reversed its decision yesterday afternoon after Ms Pauwels contacted The Dominion Post in desperation.

Mr Van Kampen, 46, a teacher, was killed by Te Horo grandmother Alison Downer, 71, who has admitted she was driving drunk when she hit him as he cycled home to Otaki from Waikanae in September.

Ms Pauwels is on a widow’s benefit and was relying on the $157,000 payout to cover the mortgage on Mr Van Kampen’s one-bedroom cottage, where she lives with her son Dante, 13, and the couple’s five-month-old daughter, Alexandra. “I get $400 a week and that barely pays for food and nappies and clothes for the kids.” ING’s initial offer of $80,000 would not have been enough to keep them in the house. “We’d literally be in the gutter.”

She was “very, very pleased” ING had changed its mind. But she said she should not have had to plead with the company or go to the media to get it to reverse the decision.

“It’s very stressful and traumatic that I had to go through this. It’s hard enough getting the kids through Christmas without Frank – and now this on top of it.”

Jeremy Nicoll, managing director of ING’s insurance division, said the company had changed its decision after he and a claims manager reviewed the case. “We took it to the next step and said, ‘Let’s be fair about this.’ We both had a look at it independently and came to the same decision [to pay the full amount].”

The staff member who made the original decision to pay out only part of the claim was “just following due process”, Mr Nicoll said.

Insurance and Savings Ombudsman spokesman Lionel Hinton said that, if ING would have offered different terms had Mr Van Kampen disclosed his bowel condition, it was within its rights to deny the claim, despite his death not resulting from that condition.

Ms Pauwels said the contrast between her situation and Downer’s was “so marked and unjust”. “Frank’s killer gets to spend Christmas in her beachfront mansion and I get to spend Christmas fighting for my home.”

Downer, who is on bail until her sentencing on February 3, had still not contacted the family or apologised, she said.

Make sure your life cover pays out quickly by ensuring you have made full disclosure to your insurer at application time.  If you have any doubts, contact them to discuss the information you have supplied.

For further information on non disclosure, visit our web site