Fine print deludes insurance policyholders

MATHATISI SEBUSI

MASERU – While some people take insurance policies to protect their belongings, be it property, cars or businesses from damage and theft, most insure their lives and specifically cover eventualities like death.

In most cases, the insured enter into a contract with the insurer well aware of what the terms and conditions entail. But, quite unfortunately, that is not always the case as others blindly sign such agreements after being lured with huge cover sums.

Due to either laziness or illiteracy and even ignorance, such contracts which normally cost millions of maloti end up being entered into with the policy holder not properly enlightened as to the kind of deal they have signed up for.

But, on the other hand, desperation and sheer greed have modified the entire landscape of funeral policies as most people see such deals as their tickets to readily attained wealth.

Such people are normally ready to go to extreme measures like crossing the justice line through, among others, faking deaths, forging documents and killing their loved ones as a means to an end.

A lot of people are serving time behind bars because they assumed they could cheat death and make a quick buck at the expense of both insurance companies and their loved ones.

Recently, a spate of cases has been reported by police involving partners killing one another in order to claim insurance fortunes.

Some of these suspects are currently in police custody and waiting to appear before the courts of law for their subsequent prosecution while others have been remanded in custody.

While owning an insurance policy normally comes in handy in the event of death in a family, it could on the other hand be a source of endless distress.

For instance, where a policyholder discovers that they were aware of clauses which do not cover their specific cases and encumber them from making a claim.

In principle, a policyholder should comprehend the terms and conditions of the contract prior to endorsing it.

But it is also the recruiter’s responsibility to ensure that all clauses in the policy are thoroughly explained to the potential client before they sign the contract.

Jonathan Paul Masupha is one such policyholder who was not afforded adequate enlightenment before they took an insurance policy with the insurer.

Masupha, 43, of Lekokoaneng, Berea says given the benefits he was promised during his recruitment, only a fool would not have turned down the offer to take up the policy.

“I immediately took up the policy without hesitation because I believed it was a real bargain which could not be ignored. I signed the contract unaware that there were some strings attached.

“The only clear part was the amount of the monthly premium I was to pay and how much I would get in terms of claims,” he says.

But he quickly admits that no amount of explanation would have made up for their illiteracy.

“I believed all that mattered was paying my monthly premium with the understanding that no matter what happened, I would get compensated in the event that the people I had covered died.”

Masupha says after his nephew whom he had covered under his policy died, he approached his insurer.

But he had the shock of his life when he later discovered that his late nephew could not be compensated because he was allegedly killed while committing a crime.

This is a condition he had never heard of although it is clearly quoted in section 13 of the policy contract, stipulating that an insured person shall not be covered if he dies during the commission of a crime.

With this new revelation, Masupha was forced to bid his M10 000 cover goodbye.

“My nephew was killed attempting to rob a grocery store in our neighbourhood. I did not condone his unruly behaviour, but I believe that he deserved a cover for I had religiously paid my premiums, hence I did not think how he died really mattered.”

This of course came as a huge shock to him and the whole family was disappointed because despite the way their son had perished, they still reckoned he deserved a decent burial.

“I understand that there are specifications and standard procedures followed by different insurance companies, but I believe the recruiter did not do me justice by not explaining the entire contract to me beforehand.

“This is so especially because as illiterate rural people we are not familiar with signing contracts and reading them.

“As head of the family, I insured every member of our family because it is my responsibility to do so. But had I known about that particular clause, I would have been better prepared and been able to act accordingly when my nephew died,” a disenchanted Masupha notes.

During a quantitative research that Public Eye undertook, it emerged that out of every 10 policy holders, only four were wholly aware of all terms and conditions their insurance policies entail.

It also emerged that there was a common belief that as long as policyholders consistently paid their monthly premiums, they would be covered.

Another shocking revelation was that policyholders’ focus is customarily on the cover prices and hardly on the terms and conditions of their policies.

It further emerged that of those who are unaware of their contract conditions, two could not even read and write English.

Public Eye also discovered that out of five policy recruiters, only two vaguely explain the written contract, while others only explain when requested to do so.

The marketing manager of Alliance Insurance Company Limakatso Mokobocho notes that their company ensures that its clientele fully comprehends every detail of their contracts.

Mokobocho says as proof that they understand their contracts, they are given forms to sign to show that they agree and understand the terms and conditions of their policies.

Mokobocho says Alliance does not have online applications because it wants to ensure that everybody that signs up for a policy is clear about its conditions.

Although they guarantee that contracts are thoroughly explained before they are signed, she adds, they still get cases of people who claim they were not well informed of the terms and conditions of their contracts.

She notes that they do not compensate claims of insured people who die during commission of criminal activities.

The sole reason behind their policies, she says, is to help in crises and not promote organised crime.

“We work hand in hand with police and submit reports where accidents have occurred. As much as we inhibit covering criminals, people do not reveal their illegal acts when they sign contracts and we only get to know about them through police investigations when they want to be compensated.”

Mokobocho says suicide is one of the cases that have specific terms to be covered, such as the provision of a post-mortem report, among others.

“If a policyholder commits suicides so that their children get money, there are specific things that are observed which, among others, include how long the policy had been held,” she says.

Mokobocho also says another reason why they scrutinise policies is to avoid criminal acts committed in the name of policy covers.

She says if specifications of policies were not regulated and strict, people would open policies with the aim of getting money out of it and kill one another in the process.

Police spokesperson, Superintendent Mpiti Mopeli, says a number of cases of fraud have been opened this year which involved policyholders who tried to cash in on their insurance policies by breaking the law.

The crimes, Mopeli says, include forging documents and killing partners for the cover monies.

“The law is clear about this; people who commit crime for any reason whatsoever, be it for policy covers or anything else, are arrested and dealt with accordingly by the law.”

Mopeli adds that although he is not sure whose responsibility it is to understand contracts associated with policies, more people are cheated into signing contracts they do not particularly understand for various reasons.

One of the reasons, he notes, is the slothfulness to read the tiny fonts such contracts are drafted in while others simply do not understand the language they are written in.

A Maseru lawyer who has dealt with similar cases, Advocate Mohanoe contends that the responsibility of understanding the terms and conditions of a contract lies with the person that wishes to take the policy.

Mohanoe says it is imperative that people understand contracts before signing them.

He notes that in case they do not understand the language or legal terms used they should seek legal guidance before signing.

He, however, shows that in a case where an illiterate person is made to sign a contract without any explanation given, such a contract can be challenged in courts of law and be overturned.