Claiming on disability insurance is never a happy occasion, with the lifestyle adjustments and personal trauma that often accompany a serious injury. However, sometimes sad events can have happy endings – here is an example from the annual report of life insurance Ombudsman Judge Brian Galgut.
Last year, Judge Galgut received a complaint from a businessman who was involved in an accident in 2007 which resulted in brain damage. Because his injury resulted in his business going bankrupt his R1.1 million disability cover was paid over to the two banks that had sequestrated him, leaving him with none of the insurance pay out.
Because the Long-Term Insurance Act requires that only R50 000 be protected from creditors, the judge could only reserve this amount for the complainant. The rest of the policy had to be paid to the banks, but Judge Galgut decided to take action and informed the Financial Services Board and National Treasury about the case. The judge recommended that the law be amended to protect policy holders.
A few months later, Judge Galgut received news that the existing legislation will soon be amended to protect policy holders who have become disabled and are unable to work or have experienced financial difficulties as a direct result of their disability.
Having made a big difference for policy holders all over South Africa, Judge Galgut still felt that the man who lodged the complaint in the first place should be assisted. When the judge approached the two banks involved in the case with news of the upcoming changes to legislation, they agreed to waive 80% of their claims against the disabled businessman as a gesture of good faith.
This case study shows how law makers and insurance providers can make a difference by putting policy holders first. Disability insurance policy holders can now look forward to added protection should they have to claim on their policies.