Don’t get tripped up by credit life insurance claims

The best part of my job is being able to use my platform to get justice for consumers by engaging with companies’ media response people.

Often a single e-mail from me gets the result the person has battled for months to achieve on their own.

But I’m not the customer; they are; they’re the ones for whom the companies should be moving heaven and earth to do the right thing.

Take Linda’s struggles with her credit life insurance claim.

Credit life insurance policies cover monthly instalments on your loans if you or your family can prove you’ve died, been retrenched, or, in some cases, been put on short pay.

The 51-year-old Garsfontein recruitment consultant was put on reduced pay from March and then retrenched in June.

She had taken out credit life insurance with House & Home’s insurance division Shoprite Insurance when buying furniture in mid-2018, the premium adding R1,326 to her debt, to be financed over the 2½-year term.

She put in a claim in good time, submitting all the proof requested, but still her account went into arrears, with hefty interest added.

Linda tried to get clarity from Shoprite Insurance, to no avail.

I took up her case with the Shoprite Group, asking what Linda could have done differently to avoid her account going into arrears.

It turns out she was the victim of first a system delay, then an inability or unwillingness to put that right.

Ironically, the lockdown — the reason Linda had to claim on her credit insurance policy — was presented as the reason for her delayed payment and thus those arrears.

“Our furniture stores had to close when the lockdown started, resulting in customers being assisted with insurance claims via e-mail, as opposed to a personalised service at any of our branches,” Shoprite said.

“Our system did not process the journals for the instalments prior to the date that the customer’s claim was approved for, because the unprecedented times called for a manual process to override default system settings.”

As a result, only Linda’s June and July instalments were paid.

The insurance company has now made payment for April, May, June and July, and reversed the arrear account interest.

“We have spoken with the customer directly and are providing her with an updated statement reflecting the corrected status.

“We apologise for the manner in which the claim and its subsequent query were handled.”

Here’s the bit that really pleases me: “We have also requested all such claims processed during the lockdown period be reassessed to ensure that no other customers were similarly affected.”

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I also heard from Eva, 67,  this week.

Shortly before the lockdown in March, she contacted Old Mutual to ask for a copy of her funeral policy, which covered her and her two children.

She took out the policy about 23 years ago..

To her horror, Eva was told it only covered her children as her cover had expired two years ago when she turned 65.

“If there was any age restriction mentioned by that consultant, I would not have taken out the policy, as premiums were not refunded at the expiry date,” she said.

“And I did not receive any documentation advising me my policy is no longer in effect.”

Eva asked to see the policy wording, but got no response, so she contacted me.

I asked Old Mutual if it still sold funeral policies that lapse when the insured reaches 65, and if so, given that is an extremely crucial policy term, how the company ensures consumers are made aware of it?

Old Mutual responded: “We have investigated the matter and confirm that [Eva’s] policy is in good standing and has not ceased.

“When customers reach the age of 65, they no longer pay any premiums but their cover continues, as listed in such a policy.

“We acknowledge and have apologised for the poor service she received.

“This was an isolated incident and we are working to ensure that this does not reoccur in the future.”