Non-disclosure and what it does to a claim

When you apply for cover in New Zealand you enter a contract of utmost good faith, placing on you a duty to disclose everything a prudent underwriter would want to know — whether or not the form asked. That duty runs until the policy is issued, so anything that changes in between is disclosable too.

Non-disclosure is what happens when that duty is not met, and it is usually not deliberate. The common version: someone answers a long medical form quickly, forgets an investigation that came to nothing five years earlier, and never thinks about it again. Years later an assessor reads the GP notes and sees it.

What happens next depends on two questions, in order. Was the omitted fact material — would it have changed the underwriting decision? And if so, was the omission innocent or deliberate?

These are treated very differently, and it is the question every claims assessor and every dispute resolution scheme works through.

Two things follow that people rarely realise. An innocent omission of something that would not have changed the terms is usually not fatal — insurers do not void policies over trivia. And the remedy is often proportionate, an adjustment rather than a refusal, so it is worth asking exactly what the insurer says it would have done differently.

What to do right now if you think something was missed

1. 1Do not cancel anything. A policy with a disclosure question hanging over it beats no policy.
2. 2Write down what you think was not disclosed and when it happened, as precisely as you can.
3. 3Talk to the adviser who arranged the cover first. They hold the original application and can see what was asked and answered.
4. 4Tell the insurer in writing — what the fact is, when it occurred, and that you are disclosing it now.
5. 5Expect one of three outcomes: no change, an amended policy with a loading or exclusion, or more rarely a decision not to continue cover.
6. 6Keep the written response with your policy documents. It is what protects your family later.

These are the details that decide whether the cover does what you expected. Read them before you compare on price.

• Whether the fact is actually material — a resolved minor issue may not be.
• Whether the insurer’s response is a loading, an exclusion, or no change at all.
• Whether an exclusion added now is narrower than the risk of the policy being avoided later. It usually is.
• Whether replacing the policy beats amending it — but never cancel the old one before the new one is issued.
• Whether an adviser recorded the disclosure at the time even if it did not reach the insurer.

Every New Zealand insurer writes how life insurance claims work to its own wording, and the words are where the money is. Two policies that look identical on price can pay very differently when it matters. Closing that gap is the entire job of an adviser.

• An adviser holds the original application and can see exactly what was asked and answered before anyone contacts the insurer.
• They can raise the issue with an underwriter on a no-names basis first, to find out the likely outcome.
• They know which insurers meet a proactive disclosure with a simple amendment and which take a harder line.
• If replacement cover is the better answer, they can arrange it and keep the old policy in force until the new one is issued.

There are three ways to buy life cover in New Zealand, and they are not equivalent. You can buy direct from one insurer, which means you see one product range and one underwriting appetite. You can buy through your bank, which usually means a single insurer’s product sold under the bank’s brand, often with narrower definitions. Or you can go through an adviser, who quotes several insurers at once and is required to put your interests first.

The premium you pay is the same either way. Insurers build adviser commission into their pricing whether or not an adviser is involved, so going direct does not get you a discount — it just removes the person whose job is to argue your corner at application and at claim time.

• An adviser can see which insurer is currently taking your health history on standard terms, and which one will load or exclude it.
• An adviser can structure cover across two insurers if that produces a better outcome than putting everything with one.
• An adviser handles the underwriting back-and-forth, and is the person who chases the claim when a family is least able to.
• An adviser has to document why the recommendation suits you, which is a written record you can hold them to.

We are a referral service, not an insurer. We do not quote premiums and we do not sell policies. What we do is put you in front of one licensed New Zealand adviser who can compare the market properly.

1. 1

   You tell us what you are looking at

   The form takes about a minute. Nobody asks for your medical history on a web form — that conversation happens with the adviser, properly, and only once you have decided to proceed.

2. 2

   An adviser calls you

   A licensed New Zealand adviser talks through your situation: who depends on you, what you owe, what you already have in place, and what you are actually worried about.

3. 3

   They compare the market

   The adviser quotes across the major insurers, checks which of them will take your health history on the best terms, and puts the options side by side in writing.

4. 4

   You decide, in your own time

   There is no obligation and no cost to you. If the answer is that you already have enough cover, a good adviser will tell you that.