Monday, December 27, 2010

Incontestability clause in life and health insurance policies

Read this explanation about incontestability clause in a life insurance policy. And this explanation about its application to a health insurance policy.

I am not sure if there is an incontestability clause in Medishield or a Shield policy issued by an insurance company. There is need for this type of protection of consumers against unfair rejection of claims.
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1 comment:

Vincent Sear said...

In Singapore, all life policies I've seen contain the incontestibility clause. However, all health policies I've seen don't. I think this is an area the regulators should look into.

In life policies, it's quite straight forward. Even suicide is excluded after the contestible period, i.e. the insured may die or become disabled by any cause and it's still an admissible claim.

There's the question about smokers not declaring at policy inception to save some premiums. It's still an admissible claim. However, the insurer may deduct the smokers' loading (usually by 3-year premium band) from the claim payout. The same practice may be applied to understated age, but this is getting rarer as modern birth certificate system has become practically universal in place.

Exclusion to incontestibility are fraudulent or criminal intent, e.g. non-disclosure of pre-existing condition knowing it would result in a sure claim or persuading someone suicidal to buy a policy or with intent to murder.

December 28, 2010 12:43 PM

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