A life insurance policy is one of the most important types of insurance you will ever apply for and outside of home insurance, it may be the largest insurance policy you have.
As a result, when you apply for a policy you will be required to go through a detailed application process.
Your Duty of Disclosure
When you are going through the application process, you have a legal duty to disclose any and all information which may be relevant to your application. Failure to comply with this duty of disclosure can result in your policy being cancelled or your level of cover being reduced.
What information do I need to disclose?
Normally, you will be required to disclose the following information:
- Medical history
- Financial history
- Sports and pastimes you participate in
The level of information you will be required to provide may depend on the type of cover you are applying for.
You are required to inform your insurer about your relevant medical history from the day you were born until your policy goes in force. This means that if you suffer from a relevant medical condition that only occurs after you have gone through the application process; you are required to notify your insurer.
Relevant medical history includes information which can affect the outcome of your policy. For e.g. telling your insurer you suffered from the flu may not be relevant whereas telling them you were born with a heart defect is relevant. When in doubt you should always disclose.
In some cases, if you are unable to remember exact details of your medical history, your insurer will request an authority to view form from you, giving them the authority to contact your doctors and view your medical files.
Some insurers may also require you to undergo a medical examination or blood test depending on your medical history. This will generally be paid for by your insurer.
It is important to note that medical examinations, blood tests and the viewing of medical records will not always be requested by the insurer.
For lump sum benefits (life, trauma and TPD), you will be required to provided only limited financial information which includes your yearly income. If you are applying for a larger lump sum benefit (generally over $5 million) you may be required to justify why you need such a large amount of cover.
For income protection you will be required to provide proof of income at the time of your policy application.
In both cases, if you have suffered from bankruptcy or insolvency, this will need to be disclosed.
You will generally be required to disclose your occupation to your life insurer for life, trauma and TPD.
For income protection, you may be required to disclose further details about your occupation including qualifications, experience, the exact type of work you do etc.