Many ordinary South Africans who seldom read “the small print” in contracts were recently puzzled by funeral insurance provider Icebolethu Group’s refusal to pay out the death benefit for a person who died while allegedly part of a kidnapping. Icebolethu revealed that in the course of processing the claim lodged by the policyholder, a relative who had included the deceased as a covered life in her policy, it emerged that the deceased was killed in a shootout between suspects and police. According to the insurer, the deceased had, at the time of the incident, been the driver of a vehicle in which a kidnapping victim was being conveyed.
It all boils down to funeral cover policies being underpinned by a contract between the policyholder and the insurance provider. Exclusion clauses to the effect that the insurance provider will not pay out in the event of the person whose life is covered by the policy dying as a result of his/her involvement in a number of activities are standard in the long-term life and funeral insurance industry. One of the Standard Bank Liberty Group’s terms, for example, reads: “If you die [or are injured or disabled] because you committed a crime or did something illegal, you will lose all benefits.
Liberty Group may cancel all cover and you will lose all premiums paid.” Sanlam’s cover policy document reads: “These policies will not pay out in the case of any act or omission by the covered person which is in violation of any law.” Icebolethu’s funeral plan document states: “No claim will be admitted in terms of this scheme if the event giving rise to the claim is caused directly or indirectly by or is in any way attributable to any of the following: While some believe the exclusions are expressly or by implication provided for in statutes such as the Long Term Insurance Act 52 of 1998, they instead appear to have a more direct rooting in the principles in our law that govern the legality of contracts or contractual clauses. Exclusion clauses are founded on the element of legality and enforceability of contracts, known as “public policy” in law.
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