Insurance claims: Customers must come clean about medical conditions

The Life Insurance Association Singapore thanks Mr Tan Kin Lian (Unfair to reject claims due to past medical conditions; Oct 10) and Ms Shelby Doshi (Don't penalise customer for insurance agent's failing; Forum Online, Oct 12) for their feedback on health insurance claims.

Customers need to take personal responsibility and disclose any existing medical conditions and their health status, as insurers are not in a position to have such knowledge.

An insurance policy is a legally binding contract based on utmost good faith on the part of the applicant.

Insurers will not unreasonably reject a claim or treat a policy as if it had never been issued unless the applicant did not provide "material" information.

Section 25(5) of the Insurance Act states that "no Singapore insurer shall use, in the course of carrying on insurance business in Singapore, a form of proposal which does not have prominently displayed therein a warning that if a proposer does not fully and faithfully give the facts as he knows them or ought to know them, he may receive nothing from the policy".

Supposing claims made by policyholders who had chosen not to disclose their medical condition or health status in their applications are paid, it means that the other policyholders end up paying higher premiums in the future.

Insurers assess applications before granting cover.

If nothing is disclosed, there is no basis for the insurer to carry out further checks.

The application will be underwritten based on the declarations (including "nothing to declare") made in the form.

Applicants with declared medical conditions will be told of what is not claimable (that is, excluded) under their policy.

Insurers owe a duty to all policyholders to ensure fairness and equity.

Hence, insurers check for material non-disclosure before paying claims.

Pre-existing conditions are covered by the MediShield Life component of Integrated Shield Plans but are not covered by the private insurance component of Integrated Shield Plans.

If the policyholder says he was not aware of his medical condition existing at the time of application or the need to declare it in the application, the exclusion clause kicks in if his medical records show that he already had signs or symptoms, or had received advice, diagnosis or treatment before commencement of the insurance.

If the applicant fully and faithfully declared his medical history, a claim for the disclosed condition will not be rejected.

If exclusions were imposed on the medical condition declared, then the claim cannot be paid.

For upgraded plans, the insurer will apply any new underwriting terms to the upgraded benefit limits.

Where the non-disclosed medical condition arose after the original plan had commenced, claims will be based on the original plan.

Pauline Lim (Ms)

Executive Director

Life Insurance Association Singapore

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A version of this article appeared in the print edition of The Straits Times on October 30, 2017, with the headline Insurance claims: Customers must come clean about medical conditions. Subscribe