Skipping two life policy payments in 10 years costs cash-strapped widow: Salutary lesson for all consumers

In this weekly segment of bite-sized chunks of useful information, consumer journalist Wendy Knowler summarises news you can use.

The cost of missed insurance premiums

Angela’s beloved husband committed suicide in October, overwhelmed by debt. He’d had a thriving small business until Covid-19 struck and wiped out his income for many months, forcing him to borrow money at high interest rates, which created a debt burden he couldn’t get under control.

For the 10 years before his death, he’d been paying into a life insurance policy. He’d never missed a payment, until two months before his death.

His wife wasn’t aware two payments had been missed, and was horrified to discover her claim on the R1.5m policy was rejected for this reason.

She offered to pay the two missing premiums, but was told that wasn’t possible as the policy had fallen away by then.

The industry makes the point that if policyholders knew they could catch up on missed payments at claim time, there would be little incentive to pay their premiums as agreed every month.

A family friend contacted me about the case, accusing the insurer of “hiding behind the excuse that because no payments were received they were not obliged to pay out the life insurance”.

“It’s incredibly harsh and not justified that having received payments for 10 years they never reached out to Angela to ask why payments had stopped, and allowing her to continue to pay,” he said.

The Policyholder Protection Rules require insurers to give a policyholder written notice that it did not receive the premium within 15 days of the insurer becoming aware of the non-payment of the premium.

I asked the insurer if that had happened, and whether it ever pays claims outside the grace period cut-off because of the circumstances.

The response: “Our decision on the claim was correct. We apply the Policy Holder Protection Rules, which is a 15-day grace period.

“Contact was made with the policy holder via SMS and e-mail in both September and October 2022 advising of the unpaid premium, when we would debit again and that there would be no cover if the premium remained unpaid.”

Sadly Angela wasn’t the policyholder, so the insurer was not obliged to contact her about the missing payments.

Off the record, which is why I’m not naming the insurer, I was told they are helping Angela “in another manner”. That turned out to be refunding all Angela’s husband’s premiums.

Can you afford not to have car insurance with our high accident rate?

South Africa has the highest rate of fatal car accidents in the world at almost 45 deaths per 100,000 people, which is seven times higher than that of the UK. That’s according to a study released this month by car insurance experts at Compare the Market Australia.

The study, comparing 20 countries’ accident stats including India, Columbia and Peru, also found South Africa had the biggest gender discrepancy, with male drivers accounting for more than three times as many fatal accidents as their female counterparts. That is partly explained by the fact that according to StatsSA, only 21.8% of women possessed a driver’s licence in 2020, compared to 40.1% of men.

“These unsettling statistics emphasise the dire need for adequate motor insurance in a country where the likelihood of being involved in an accident is alarmingly high,” said Christelle Colman, CEO and co-founder of Ami Underwriting Managers.

“Plus, about two-thirds of the vehicles on South African roads are uninsured. This means there's an almost 70% chance that an accident might involve an uninsured driver.”

Colman stressed that the high number of uninsured motorists forces those who do insure their vehicles to shoulder higher premiums, effectively subsidising others.

“This situation does not only affect the insured financially but also negatively impacts their claim records,” Coleman said.

“It is critical to increase the number of insured drivers on our roads, which will eventually result in lower motor insurance costs. The more contributions we receive, the lower the premiums and excesses we can offer to consumers.”

Unit prices disappear from PnP’s shelf price labels

Savvy consumers know that taking note of unit prices is key to getting the best value for money when grocery shopping. That’s because competing products often come in different pack sizes, sometimes so subtly different it is hard to notice. The only accurate way to compare prices is to compare unit prices, which is the per kg or per 100g.

Grocery retailers are not legally required to display unit prices along with retail prices, which is why I’ve long given credit to Pick n Pay and the Shoprite group for voluntarily displaying unit prices on their shelf labels. So I was distressed to learn from reader Andrew Ball that PnP’s new shelf labels don’t display unit prices. Only the selling price appears.

“I was told it was an IT issue but it has been weeks now,” he told me.

“Any chance you can take them to task?”

Responding to my query, PnP’s commercial executive Brian Austin said: “Mr Ball is quite right in saying the information was on the old labels, but not the ones currently in store.

“This is on our list of developments to be implemented, and we are working on where it will be placed on the label.”

I asked the obvious question: why was it removed? That’s going backwards, in my view.

“We are moving to a new shelf-edge label system called ECS which allows us to put promotions onto the shelf-edge label,” Austin said.

“Currently 50% of our stores have old labels reflecting price per unit or kg and 50% of stores have new labels which don’t.

“We are in the process of fixing the new ECS to include the unit price.”

Glad to hear it.

GET IN TOUCH: You can contact Wendy Knowler for advice with your consumer issues via e-mail: consumer@knowler.co.za or on Twitter: @wendyknowler.

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