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Life insurance: expect to asked some very personal questions

Life insurance: expect to asked some very personal questions

By John Grant

You may have seen a couple of recent stories about questions asked by Life Insurance companies in their application forms that some consider are going a little too deep into the personal lives of applicants. Examples of the questions that have raised concerns are:

  • AMP – “if they were aware of being exposed to HIV. This included whether they'd had sex with, or as, a prostitute.”
  • Sovereign – only ask if you have ever had AIDS or HIV antibodies
  • Fidelity – “Have you or your sexual partner(s) (i) received or do you expect to receive any medical treatment, advice, counselling, or blood tests in connection with AIDS or an AIDS related condition, and (ii) Engaged in sexual activity with person (s) whose previous or current sexual behaviour involves homosexual activity or puts them at risk of HIV?”
  • Asteron - asks you to complete an AIDS declaration stating you are not carrying antibodies and you have not sought nor intending to seek medical consultation or treatment or investigation and furthermore you are asked based on your knowledge if all sexual partners you have had in the last five years could also make the declaration.

Insurance is based on "uberrimae fidei" which is Latin for “Utmost Good Faith”. This principle requires the parties entering a contract to reveal everything that is material to the transfer of the risk from the proposer to the insurer.

Every insurance contract is based on this and an insurer has the right to ask questions that they see as appropriate to understanding the risk they are about to undertake.

When AIDS first appeared on the scene in the early 80’s, insurers adopted a conservative approach and started asking questions to identify applicants who could be regarded as higher risk due to their sexual preference or sexual behaviour. The questions included in application forms were not well received by insurance agents who found themselves in awkward positions of asking people about the sexual history in front of their partners. Agents often observed that the questions, although understood, were not being truthfully answered due to the sensitivity of the situation. Insurance application forms also have a catch-all statement within the declaration that asks the person signing to confirm that they have not withheld any material information that should be known to the insurer in assessing the application.

Although we have seen very few deaths from AIDS in New Zealand, life insurers appear to view this as something they need to ask to be able to eliminate a known pre-existing risk before acceptance of the coverage.

Over time insurance brokers and agents have found ways to make the questions a little less embarrassing - a common approach is to have the applicant complete that part of the documentation privately, even though the rest of the declarations are worked through jointly with the agent. Investment Savings and Insurance Association chief executive Vance Arkinstall said insurers had to ask personal questions to be sure they understood  the risk.

"There are delicate questions and Companies ask them in different ways and it is just part of assessing what the risk is.

"Some companies will have different views, but there are concerns over sexual preferences of people from time to time and it's born out of the risk of AIDS and those sorts of issues.

"Some people do find the questions difficult to answer and in that situation, if you're uncomfortable, well, there are a lot of insurers - go and try another one."

The situation becomes more of an issue between partners who have not been completely open with each other. If the insurance is being proposed on one partner's life with the other partner owning the policy, then both parties need to sign the document.

Therefore if you are applying for insurance, be prepared for questions of a very personal nature. You do have a choice, you can opt not to answer the question and seek out an insurer who is less intrusive in their questioning. Or, if you think the questions have been too personal then you are always able to lodge a complaint with the privacy commissioner.


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