Since the Constitutional Court of South Africa decriminalised use and private cultivation of cannabis in September last year, there has been much discussion around the personal use of dagga and how it could affect a long-term insurance claim, according to long-term insurer Liberty.
Dr Dominique Stott, Liberty's chief medical officer, says they encourage advisers and clients to inform Liberty of any medical or lifestyle events that would impact their application for a policy.
Stott says, not only will it reduce the occurrence of non-disclosure claims, but it will also ensure that clients receive their pay-outs when they need it most. Not telling the truth about their health on an application form, places the payment of a claim in jeopardy.
Factors such as frequency of cannabis use, the amount you use and the purposes you use it for are all considered.
According to Stott, the benefits of full disclosure include reassuring clients that their claims will be paid in accordance with the terms and conditions of the policy; ensuring a fair and more affordable premium is charged; leading to faster underwriting and fewer medical requirements to speed up the application process; resulting in fewer requirements needed at claims stage; and leading to fewer legal and client disputes.
"If you are unsure of what to disclose, disclose it anyway and let the underwriters decide how this needs to be managed. If your financial adviser fills in the insurance application form for you, it is your responsibility to read through everything carefully before signing," says Stott.
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Stott's 3 important questions to clarify cannabis usage and insurance cover:
Will you repudiate a claim if I use cannabis but don't declare it on my application form?
Insurers have a responsibility to ensure that all valid claims are paid, but applicants have an equal responsibility to answer all questions truthfully.
If non-disclosure is uncovered, and a positive cannabis history is detected, this may lead to problems with payment of the claim.
If I don't smoke cannabis but I drink and eat it, will I pay smoker rates?
The short answer is yes, the policyholder will pay general smoker rates as well as rates linked to the risk of the hallucinogenic properties of the substance.
This is why it is so important to disclose the usage of the substance at underwriting stage.
If a claim is as a result of being "stoned", will it be illegal, and the claim declined?
If an illegal act is committed, Liberty reserves its rights to decline the claim.
Consuming cannabis in itself is not an illegal act, so claims will not be repudiated if the policyholder was simply using it in their private capacity.
This is only relevant if no illegal activity has been undertaken, for instance, driving while under the influence, causing an accident and injury resulting in a claim.