Personal information usually required for life insurance cover

What personal information is usually required for life cover is a question often asked because the process of completing insurance applications and claims, like any other official forms, is daunting. We thought computers heralded the paperless era but, unfortunately, it seems that computers are even greedier than humans to know the details of our private lives in triplicate. Their appetite for paper-based confirmation is boundless. The print icon is a ubiquitous feature of every computer programme; a kind of virtual self-affirmation.

When you apply for life insurance, you complete a confidential application form comprising a number of personal information questions. In brief, these questions cover your contact details, your beneficiaries and your medical history.

You need to be 110% honest in your answers because your life insurer uses these details to assess your risk and calculate your premium. More importantly, when pay-out time comes, your insurer can use any lies and/ or non-disclosures to elect not to pay your claim.

You also need to be 110% honest because according to the fundamental precepts of claims law you are obliged to inform your insurer of any information that may impact the company's perception of your risk or that may change the circumstances of your potential payout even if they didn't request the information explicitly.

Legally, claims judgments work kind of like the South African Constitution works or the United States' Bill of Rights. There are underlying assumptions, if you will, that underpin the law. These assumptions do what the cold letter of the law can't do - they provide a bedrock of grace and fairness in judgment to what are imperfectly worded and incomplete potential scenarios. Hence, the Insurance Ombudsman.

But let's look at a practical example: if you are a non-smoker when you fill in your life insurance application form but have a history of giving up and starting up the weed, you need to inform your insurance company of the fact. It makes sense. If you smoke 40-a-day for two weeks and then give up for two weeks, only to start the whole process again on a regular basis (perhaps you're a sales representative who smokes when out of town), essentially you're a pack-a-day smoker. In fact, you're in a higher risk group because human bodies react badly to shocks and you're probably a stroke victim waiting to happen.

It's not true that a picture doesn't lie; you only have to view your family photograph album. If an insurer is not happy with the answers you have given, you may be requested to do a medical exam. Usually this is paid for by your insurance company. Very often, if an insurer doesn't require a medical, it is because they have excluded certain scenarios from the policy, so read the fine print or talk to your insurance broker before signing anything.

Your personal details combine to form a picture of your risk status. Just as statistically women claim less for car accidents, younger people tend to be less prone to debilitating disorders such as arthritis and single people are more prone to stress and car accidents.

Let's look at the questions asked in a typical online e-Quote for life insurance.

The details you will need to fill in may include (insurance application forms and policies vary among insurers):

• Contact details (do you live life precariously under a bridge or in a secure townhouse complex?),
• Date of birth (how old are you and what, statistically, is your life expectancy?),
• Gender (gender, like age, affects your life expectancy),
• Smoker status (smokers generally succumb terminally earlier in life to lung disease but require more medical treatment while they're still alive),
• Highest education (education plays a role in the way you conduct your lifestyle and understand the effects of what you do, e.g., smoking),
• Medical history (some medical conditions are hereditary),
• Current medical status (e.g., whether you are diabetic or HIV positive, and whether you are on chronic medication),
• Monthly income (are you able to afford the premiums for this policy and are you part of the social strata that is neither desperate nor extravagant in its lifestyle?), and
• Occupation (are you a secretary or an Outback Steve living on the edge?).

Each and every question you answer has a mark attached to it in terms of risk and the question itself is rated in terms of importance, i.e., ranked. While statistically blue-eyed individuals may have claimed more in the past year for car accidents than brown-eyed individuals, actuaries will have found that there is a link between the statistical figures and the reasons they are consistently similar, e.g., blue-eyed people are more likely to have night blindness and therefore have more accidents. There is no fathomable reason why blue-eyed householders should be burglarised more often. In the first instance, the question may be rated as worth 50 points; in the second worth 2.

The good news is that information you give your insurance company or broker is confidential and by law cannot be passed on without your permission; but here's the proviso: 'unless required to do so by law'. Unless you're a Columbian drug lord, it's probably best to be honest. If you are a Columbian drug lord, you can probably afford a good lawyer and have a private plane to make a quick getaway if you get caught.