Court backs insurer after woman dies just after cancelling life policy
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Pretoria - When Joburg resident Susan Church decided to cancel her insurance policy from Discovery Life Limited, she had no inkling of the events that were to befall her six weeks later.
While on holiday at Sani Pass Lodge, she was overcome by carbon monoxide fumes from a faulty geyser in the showers. She collapsed and died.
Church’s life was insured for at least R3 million, but on her death this amount was due to escalate. But the problem was that Church cancelled her life policy shortly before her death and wanted to go to another insurer.
When the parents wanted to claim the money, the insurer stood firm that Church had cancelled her insurance.
Her parents, who were the beneficiaries of the policy, took Discovery to the Gauteng High Court, Johannesburg, where they demanded that R4m be paid out to them as a result of their daughter’s death.
An acting judge of that court agreed with the Churches, and ordered Discovery to pay up.
But five judges of the Supreme Court of Appeal (SCA) now ruled that the parents should remain out of pocket as Discovery was in its rights not to pay them.
Susan Church paid her monthly instalments to Discovery for about two years and eight months, but decided in August 2018 that she wanted to change to another insurer.
In December 2015, Church took out a Discovery classic life plan insurance policy contract.
The policy insured her life for R3m, which was to escalate until the date of the occurrence of the insured event – being her death.
The policy began from January 1, 2016. In a telephone conversation in August 2018 with an employee of Discovery, Church told him that she had decided to cancel the policy as she was moving over to Liberty Life.
She explained that she liked what Liberty Life had offered her, hence her cancellation of the policy.
On August 15, 2018, Church wrote to Discovery and said that she was cancelling the policy with immediate effect.
The next day an employee of the broker informed her that a notice period of 30 calendar days applied to cancellations.
They sent Church a letter stating that the policy would be cancelled with effect from October 1, 2018.
She was told that the last day of cover would be September 30, 2018, with the final premium payable on September 3, 2018.
On August 23, 2018, and unknown to Discovery, Church instructed her banker to stop the payment of the debit order regarding the premium due under the policy for September 2018.
When Discovery did not receive the payment for the last month, they told Church that they would abide by her wish and cancel the policy with effect from September 1, 2018. While there was a 30-day cancellation period, Discovery said it was clear that she wanted nothing to do with them.
But unfortunately she died soon afterwards on September 22, 2018.
Five days after her death her parents insisted on paying the outstanding premium (for September) to Discovery.
The broker responded by requiring a fully completed and signed declaration of “health by all lives assured” form.
There was no response to Discovery’s letter. Instead, a month later the parents claimed under the policy.
Discovery, in response, turned it down as the policy was cancelled prior to Church’s death.
In their court application, the parents argued that Discovery should have notified Church that her premium for September was never paid before they simply cancelled the policy. They also said that she should have been given a 30-day grace period to pay.
Thus, they argued, Discovery was obliged to honour the claim and pay out the sum assured as according to the parents she was insured until the end of September.
But the SCA ruled in favour of Discovery and said Church made it clear that she did not want to continue with the policy.
This was endorsed by the fact that she stopped her debit order and Discovery was not obliged to inform her of the non-payment, as it was per Church’s instructions to her bank.