The principle of utmost goodfaith has often be cited as an important principle that the applicant of a insurance contract has to remember. The applicant is often warned to disclose any material fact he knows or ought to know otherwise there is no payout. But this principle also applies on the insurer too. Here is a real life story of utmost goodfaith on the insurer. The real story goes like this:

The policyholder had a heart attack but his agent told him that his whole life policy cannot be claimed. Thus the policyholder did not claim and continue paying premium.

9 years later an independent financial adviser (not his original agent) advised him that he should submit a claim because the original agent is not the claim officer. Nobody will know whether is the insurance claimable until one try to claim. Thus this IFA helped his client to submit the claim despite him earning nothing for processing this claim. Now, 9 years have passed and anyone with common sense will know that the odds aren’t that good. Usually there is a limited time frame to submit a claim. This can be one month to one year (depending on the contract). Definitely 9 years late is going to invite a lot of question. Nevertheless this IFA tried his “luck.”

Today, the result is out. The insurer decided to pay the claim despite the diagnosis of the illness was 9 years old. Amazing. Contractually the insurer does not need to payout anymore since it was too long ago. But why does the insurer pay? I believe it is adhering to the principle of utmost goodfaith. Truly amazing how this principle works in real life.

As a side track, I am sure this IFA is going to win a lot of customer for his putting his client interest first – even if he receives no remuneration. As for the original service agent, he did a great disfavor and is truly the most hard-core unethical adviser in the planet earth and perhaps Venus and Mars.

For further discussion on this story, see here: Submitting a Heart attack claims 9 years after the attack