Aliyawanders

A few years ago, I knew someone whose Takaful certificate was cancelled from inception.

Waiting period? Completed.

Contestability period? Completed too.

So why was his certificate cancelled?

Because it turned out he had hidden from his agent that 10 years before meeting the agent, he had been diagnosed with anxiety.

When asked about his medical history, he declared that he had none. So, his certificate was processed as a normal application and approved within hours.

I guess this is why nowadays, health declarations for insurance or Takaful include specific sections on mental health.

What happened next was that he developed a stomach ache. When he consulted a specialist, he was prescribed medication to take home. However, he really wanted to undergo an endoscopy.

To justify the procedure, he told the doctor that he had been treated for anxiety at the same hospital a decade earlier and had undergone an endoscopy then. The result back then showed no abnormal findings.

When the hospital submitted the medical justification to the Takaful operator as part of the Guarantee Letter (GL) process, his diagnosis from ten years ago was included. This was deemed as non-disclosure — meaning the client had a pre-existing condition (including mental health) but chose not to declare it to the Takaful operator.

What happened next?

The client was refunded all the contributions he had paid, and his certificate was cancelled from inception. Meanwhile, the agent was penalised for failing to uncover the client’s existing condition — including having his commissions clawed back for all those years. If the contribution amount was large enough, the agent could even face termination.

Will he be able to get another plan with a different Takaful operator? Possibly. He could try applying again or wait for special promotions that may not require health declarations.

Why is it so important to declare your health status?

Because insurance companies and Takaful operators need accurate information to properly assess risk and provide appropriate coverage. In some cases, applications may even be rejected if they are deemed unfair to other contributors.

Honestly, it is better to be rejected early so you can make alternative plans, such as setting aside additional savings, rather than paying for years thinking you have coverage — only to discover otherwise when you need it most.

Just my two cents.