Not disclosing all the material details when applying for a life insurance policy can have a dire effect, as Viantha Naidoo discovered when she lost out on R6m as the beneficiary of her late mother's policy, after it had emerged that the mother did not disclose all when she applied for the policy.

The Mercury reports Viantha turned to the KZN High Court (Durban) after Discovery Life refused to pay the policy taken by her mother, Sandra Naidoo, who died of natural causes.

Upon the death of Sandra, Viantha sought payment from Discovery in accordance with the contractual terms of the policy.

However, Discovery notified her that the claim was rejected.

According to Discovery, the contract was declared void because Sandra misrepresented her income in her application, stating that she earned R35 000 per month as a supervisor at Shoprite Checkers, Chatsworth.

Instead, it was said that her gross income earned was only R5 456 per month.

In addition, Discovery said she also did not disclose to it a simultaneous application for life insurance with another insurer, Old Mutual.

Discovery, meanwhile, cancelled the insurance contract and retained the premiums paid as a penalty. It maintained that Viantha was not entitled to any benefits under the policy, as her mother was not entirely truthful.

It said the warranty in the application form required all information to be true and correct, and for all material information to be disclosed to Discovery.

The warranty further stipulated that any benefits would be voided in the event of a breach.

Viantha, on the other hand, submitted that her mother was employed by Checkers at the time of contracting with Discovery, but that her total income was far in excess of her monthly salary from Checkers.

She said her mother had an additional income derived from other sources, such as selling cosmetics, and that she thus did not lie about her income. 

The Mercury says Viantha’s evidence was largely based on recollections of what she had known of her late mother's earnings and predominantly hearsay evidence of her mother's financial affairs.

Discovery, on the other hand, obtained the actual financial statements of the late Sandra Naidoo as well as copies of her salary slips during the period of her employment at Checkers.

Judge Mahendra Chetty, in turning down the claim, said on the evidence, the only income that was verifiable was that from the deceased's employment at Checkers.

Full report in The Mercury

Judgment