A South African court has ruled against a woman, Viantha Naidoo’s claim to her late mother’s R6 million life insurance policy after it was revealed that her mother, Sandra Naidoo, had exaggerated her income when applying for the coverage.
Judge Mahendra Chetty of the Durban High Court dismissed the claim, which was flagged by insurer Discovery in 2016, following Sandra’s death from natural causes in January of that year. Discovery claimed that Sandra misrepresented her monthly salary in her application, stating she earned R35,000 as a front-end controller at Shoprite in Chatsworth, when in reality, her gross income was just R5,500, with a take-home pay of R3,600. Discovery argued that had the correct income been disclosed, her cover would have been limited to R1.2 million or even rejected.
Further complicating the case, discovery revealed that Sandra had also taken out a policy with Old Mutual on the same day she applied for the Discovery policy, effectively making her over-insured. The court found that Sandra had inflated her income to R70,000 in her application to Old Mutual, and the company had paid out R3.3 million to Naidoo when she claimed for her mother’s death.
“I am satisfied that the plaintiff [Naidoo] has failed to prove its case,” Judge Chetty ruled. He added that Discovery was entitled to void the contract due to the misrepresentation and non-disclosure of important information by Sandra Naidoo, thus refusing to pay the death benefit to the beneficiary.
Naidoo also forfeited her mother’s premiums as part of the penalty imposed by Discovery. She had claimed her mother earned additional income as a sales representative for Avon and from dividends from a family-run business but could not provide sufficient evidence to support these claims. A manager from Avon testified that Sandra was not part of their team, further undermining Naidoo’s case.
Discovery presented evidence, including payslips and bank statements, proving that Sandra had exaggerated her salary, a fact confirmed by a human resources manager at Shoprite. Judge Chetty noted that had Sandra properly disclosed her actual salary, Discovery would not have offered the life cover amount that was granted. He also highlighted that Sandra’s insurance application was completed with the assistance of an agent who was under investigation for being part of a syndicate that defrauded insurance companies by inflating clients' incomes to secure higher coverage.
