This blog was authored by Jason Hudson, Trainee Associate.

Insurance policies can provide financial security, but only when applicants are truthful in their disclosures. In a March 2025 ruling the high court ruled against a beneficiary’s R6 million claim after the insurer proved material misrepresentation and non-disclosure by the life insured policyholder.

The court decided that the claimant had falsely inflated her income in her insurance application, and whether she failed to disclose other simultaneous life insurance applications, affecting the insurer’s risk assessment.

The claimant applied for a R6 million life insurance policy, declaring an income of R35,000 per month as a supervisor. However, evidence showed that she was actually a front-end controller earning just R5,455.89 per month. The insurer argued that if they had known her true earnings, they would have either rejected the application or offered significantly lower cover.

The claimant failed to disclose a simultaneous life insurance application with another life insurer, which was submitted on the same day through the same broker.  The defendant insurer’s underwriters testified that if they had known about this application, they would have either reassessed or outright denied her cover.

Further investigations uncovered suspicious financial activity in the claimant’s bank account, raising concerns about possible involvement in an insurance fraud syndicate.  The additional income sources she claimed were not supported by evidence.

Applying the reasonable person test, the court found that a reasonable insurer would have considered the non-disclosed information as material in assessing risk. The court reaffirmed that insurers are entitled to void policies based on material misrepresentation or non-disclosure and that non-disclosure amounts to fraud, justifying policy cancellation.

The court ruled that the insurer was misled into issuing the policy and was entitled to avoid the contract. The claim was dismissed, and the claimant was ordered to pay punitive costs.

Honesty in insurance applications is critical. Material misrepresentation and non-disclosure can lead to a policy being avoided from inception, even after the life insured’s death. This case serves as a strong reminder that insurers rely on applicants’ declarations to assess risk—and any dishonesty can cost policyholders and their beneficiaries dearly.

Naidoo v Discovery Life Limited and Another [2025] ZAKZDHC 9