If
you buy a protection or insurance product such as life insurance,
critical illness or payment protection insurance alongside your
mortgage, the person selling it to you will ask a number of questions
about your health and lifestyle.
'Non-disclosure' occurs where an applicant does
not tell an insurer a fact, which would have led to a different
underwriting outcome - typically an increased premium, exclusion
or refusal to insure.
Forgetting to mention a minor health issue such as headaches,
a smoking habit or occasional pins and needles, could mean that
your policy won’t pay out due to non-disclosure - even if your
illness or condition is unrelated.
Non-disclosure is one of the most common reasons for a policy
not paying out so it is best to always be honest when asked questions
by a mortgage or insurance sales adviser.
Non-disclosure can be a controversial area as insurers, who can
reject claims where information material to their assessment of
taking on a proposal has been left out, make fine judgments as
to whether an omission was innocent, reckless or outright deliberate.
About
one in ten claims are rejected for non-disclosure.
In practice, insurers generally pay out on claims where the policyholder
has innocently or inadvertently left out information but they
come down heavier on customers who they feel deliberately omitted
important information.
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