Bungee jumping, scuba-diving, paragliding – if you are an adrenalin junkie, you love to participate in these or similar activities, but have you checked the insurance implications if you sustain a serious injury or die while doing so?

If you speak to your life assurer, you will find that there are three possibilities:

* Your life assurer automatically covers you for hazardous activities at no extra cost;

* Your life assurer covers you for hazardous activities only if you disclose that you participate in such activities, for which you will pay a higher premium; or

* Your life assurance policy specifically excludes claims for injury or death while participating in a “hazardous activity”.

If you participate in a sport or hobby that is considered risky, you should be honest and disclose this when you take out a life assurance policy. If you already have a life policy and have not disclosed that you participate in such activities, you should do so as soon as you can.

You may have to pay a higher premium as a result, but you will be secure in the knowledge that your claim will probably not be disputed when you or your family needs the money most - in the event of an accident or your death.

You may also find that if your assurer has agreed to cover you in the event of a hazardous activity, your cover will stand if you are injured or killed while doing the hazardous activity in another country.

John Marsden, the national sales director at the Professional Provident Society (PPS), says that if your life assurer deems that your leisure activities constitute hazardous pursuits and your risk profile and premiums do not take this into account, you may not be covered in the event of an accident or death as a result of the hazardous activity.

“Most people wrongly assume that their insurance policy will cover them if they have an accident, regardless of how it happened, but this is often not the case, as some policies may contain exclusions, such as hazardous pursuits,” he says.

“It is simply irresponsible to undertake hazardous activities without being absolutely sure that you or your family will be financially secure in the event of an accident,” he says.

You may have to apply for additional cover and pay a higher premium if you plan to participate regularly in a hazardous activity. Additional cover is often very expensive compared with an ordinary life assurance policy, and in some instances the additional cover may be higher than the basic premium, Marsden says.

You should find out how your life assurance company defines a hazardous activity, because the definitions vary from company to company.

For example, one life assurer defines a hazardous activity as “any sport, aerial pursuit or activity that increases the probability of bodily injury, including but not limited to underwater diving further than a depth limit of 18 metres using any type of equipment to aid breathing; free diving; climbing or mountaineering usually necessitating the use of ropes or climbing aids; sports as a profession; or motor racing, rallying or time trialling; hunting; base-jumping; gliding; hang-gliding; microlighting; parachuting; and paragliding”.

PPS does not exclude hazardous pursuits or charge you a higher premium if you take part in them.

On Sanlam policies, certain hazardous activities are generally excluded for purposes of disability, accident and dread disease benefits.

Petrie Marx, the developer of risk products for Sanlam, says: “For other activities, your participation is individually assessed and you may be granted cover either at standard terms, with a premium loading or with an exclusion for that activity.”

Activities such as bungee jumping, abseiling and quad biking are generally covered in full if you have a Sanlam life assurance policy, unless you do quad biking at racing level.

The standard exclusions from disability, accident and dread disease benefits on Sanlam policies are:

* Specific high-risk diving activities, such as cave diving, commercial diving, and the exploration of underwater wrecks for financial gain;

* Motorised racing, speed contests and acrobatic flights;

* Specific high-risk flying activities, such as ongoing participation in microlight flights, hang-gliding, paragliding, parasailing, sky-diving, parachuting and sky-surfing; and

* Professional boxing, professional kick-boxing and professional wrestling.

However, Marx says, depending on your individual risk assessment, you may qualify for cover even if you participate in some of these hazardous activities.

If you disclosed that you participate in a hazardous activity when you took out the policy, unless an activity is specifically excluded in the policy, Sanlam will pay your claim in full, Marx says.

If you have a Sanlam policy and you plan, for example, to climb Mount Kilimanjaro, you are not obliged to inform Sanlam of your plans, and any event arising from your climb will be covered in full. Ferdi Booysen, the risk product manager at Old Mutual, says the company evaluates each policy application individually.

If you are an Old Mutual policyholder, you may be granted cover for hazardous pursuits at standard rates or at the cost of an additional premium to cover the risk to which you are exposed, depending on the activity.

You may also find that an exclusion is imposed or that cover is declined entirely, depending on the details disclosed in your policy application.

Booysen says that Old Mutual will first try to offer you cover at standard rates and then with a premium loading, before excluding cover for a particular activity or declining your policy application.

If you have a premium loading, it means that the assurer will cover you for hazardous pursuits but your premium will be higher. The difference between a loaded premium and a normal premium will vary depending on the type of hazardous activity, your level of experience and how often you plan to participate in such activity.

For example, if you tell your life assurer that you have taken up abseiling on a regular basis, the additional annual premium could vary from R1.50 to R10 for every R1 000 of cover.

Booysen adds that in some instances the risk is seen as too high to place a monetary value on it. In such cases, you would not be granted cover.

However, he says that Old Mutual will not exclude or load your life insurance policy if you participate in an activity as a once-off event, such as trying out the bungee jump at Victoria Falls while on holiday.

Liberty has a general exclusion in its policy documents for “regular participation in hazardous or risky hobbies, sports or activities”.

“We consider participating more than once a year as regular participation,” Nicholas van der Nest, the divisional director of risk products at Liberty, says.

In general, most life assurers, not only in South Africa but also worldwide, have some sort of hazardous pursuits exclusion, Van der Nest says.

“In some cases, hazardous pursuits are completely excluded, while in other cases only regular participation would result in an exclusion,” he says.

IT PAYS TO BE HONEST ABOUT WHAT YOU DO

The industry body, the Association for Savings & Investment SA, has the following advice when you take out risk life assurance:

* Always complete the application form yourself – in this way you ensure that all the facts on the form are correct and that there has been full disclosure of any pertinent information required by the assurer.

* Disclose if you participate in hazardous recreational activities.

* Disclose if your occupation exposes you to the risk of injury or death. Examples are mining, flying an aircraft and handling weapons.

* Shop around, comparing the premiums and the terms and conditions. One company’s premiums may be higher than those of another, but the policy with the higher premiums may have already factored in certain risks and you may not have to inform the company of changes to your lifestyle.

* This article was first published in the fourth-quarter 2011 edition of Personal Finance.