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can be traced directly or indirectly from participation in riot or terrorism, deliberate self -inflicted
injuries, drug and alcohol abuse, dangerous underwater diving, speed contests, sky-diving,
professional boxing and so on, are also excluded.
Medical exclusion
If the client’s medical history does not warrant standard rates, the insurer may decide to impose a
medical exclusion on identified risks, or he may add a loading to the premium, or he may refuse
the cover for a specific benefit altogether.
Cessions
A policy is an extremely handy tool to provide the security necessary to secure a loan. A bank, for
instance, wants to be sure that a client’s bond will be settled in the event of his death or disability
before the end of the bond term. The client can cede a policy with life and/or disability cover to the
amount of his bond to the bank, in which case the bank relies on the cover amount as security for
the debt. A session like this is called a
collateral security session
. The bank is only entitled to
the risk benefit in event of the life insured’s death or disability, to the value of the outstanding
amount of the bond. If the total risk benefit exceeds the outstanding bond debt, the excess
becomes payable to the deceased’s beneficiaries or estate. (At present it is Sanlam’s policy not to
cancel the beneficiary when a collateral cession is registered, but a nomination will be cancelled).
The collateral cession may be cancelled and the policy contract returned to the owner. An outright
session on the other hand means that the original owner cedes full ownership of the policy to the
cessionary. The new owner is entitled to the full proceeds of the policy.
Cessions and
Cessionary
New owner
Cedent
Original owner
Collateral security cession
Partial transfer of ownership onto the cessionary. The
cessionary’s claim to the policy is limited to the amount of the
outstanding debt.
Outright cession
The full ownership goes over onto the cessionary. The
original owner loses all rights on the policy.