KHOPOTSO: For years, the AIDS exclusion clause on long-term insurance products such as life cover has meant that beneficiaries would get nothing if the person insured died of AIDS-related causes. Fatima Hassan, a senior attorney with the AIDS Law Project, explains.                    

FATIMA HASSAN: This clause has caused immense financial hardship to ordinary people and families where a partner, a sibling or parent died of an AIDS-related illness because it meant then that the policy would not be paid out, despite the deceased having paid premiums for many years’€¦ This is how it basically worked out: In the 80s, in the 90s and in the early 2000s’€¦ a person was granted a contract for life insurance either because they were HIV-negative (either they were tested) or because it was assumed that they were HIV-negative. Some people, thereafter, sero-converted. They paid their premiums until their death. But at the time of their death, if it was established or suspected that the policy-holder died of an AIDS-related illness, then the insurance company would refuse to pay out because of an AIDS exclusion cause.

KHOPOTSO: However, in a small number of cases, says Hassan, life insurance companies would finally settle after families approached the long-term insurance Ombudsman or the AIDS Law Project for intervention. In the last 10 years, the AIDS Law Project has acted for 50 families who suffered the effects of the AIDS exclusion clause.

FATIMA HASSAN: To illustrate this, just a few weeks ago the AIDS Law Project successfully resolved a matter on behalf of the family of a Mr. A, where two of Mr. A’€™s life policies were rejected on the basis of an AIDS exclusion clause. In the case of Mr. A, despite being infected with HIV several years after taking out both policies and contributing monthly premiums for many years – about 10 years – the policies were initially declined. Fortunately, ex-gratia payments have since been negotiated and the matter has been successfully resolved.

KHOPOTSO: The decision by the life insurance industry means that current policy holders who may die of an AIDS-related illness on or after April 1st, will not leave their families to suffer the pain experienced by Mr. A’€™s family. This decision, however, is not binding to about 5% of long-term insurers who are not members of the Life Offices’€™ Association (LOA), who may continue selling policies with an AIDS exclusion clause. Gerhard Joubert, Chief Executive Officer of the Association, admits that the practice has caused damage in many people’€™s lives.

GERHARD JOUBERT: We recognised the fact that HIV/AIDS exclusion clauses cause social and other problems; that many people, especially in financially-illiterate communities, think that once they start paying a premium they’€™ve been accepted, that they’€™re fully covered. They don’€™t even know that such a thing as an exclusion clause applies and then, 10 years later when they claim they find that their claim is denied because they may have become HIV-positive subsequent to the policy being issued. And we didn’€™t think that that is particularly consumer-friendly or fair.  

KHOPOTSO: Joubert cautions that it’€™s important to take note of the context of the decision.

GERHARD JOUBERT: It doesn’€™t mean that everybody who is HIV-positive will now suddenly qualify for life cover at standard rates’€¦ It also doesn’€™t mean that somebody who applied for life cover, but was positive and knew that that person was positive’€¦ and then, didn’€™t disclose that to the life company (what we call ‘€˜material non-disclosure’€™), it doesn’€™t mean that that person will now be paid out’€¦ This is typically for a situation where somebody, firstly, may have been tested and found negative, but there is still an exclusion clause on the policy’€¦ The bigger group of people that will be affected by this is’€¦ when they applied for a policy, the company didn’€™t send them for a blood test, but instead of that, they put an exclusion clause and said that ‘€˜you are paying a premium, but you are not paying a premium for HIV/AIDS as a cause of death’€¦’€™ We didn’€™t think that that was a socially very desirable practice.

KHOPOTSO: While this may be encouraging, it remains a concern that a person with HIV will still continue to pay premiums up to 4 ‘€“ 5 times more than an uninfected individual would for the same type of long-term cover. The AIDS Law Project’€™s Fatima Hasan, says that that is one of three things they will continue to campaign against.

FATIMA HASSAN: The first is the practices and policies of’€¦ the 5% of companies that don’€™t belong to the LOA: Companies who are not bound by this decision and who continue to our knowledge, to date, to sell policies which contain an AIDS exclusion clause’€¦ Second, we are concerned about the limited availability and general un-affordability of insurance products for people living with HIV/AIDS’€¦ Third and finally, we will continue to’€¦ oppose and challenge the industry concerning its practice of mandatory pre-contract HIV testing, which we find, with our clients, is often done without proper pre or post-test counselling and the exclusion of all people with HIV from new ordinary life insurance products.