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Court orders insurer to pay loan for deceased whose life insurance entered without knowing he was on deathbed

The commercial High Court in Kigali ordered Soras (now Sanlam) insurance company to pay a loan whose owner had life cover at the insurer just a month before he succumbed to liver cancer which he never revealed to the insurance company.

The loan of nearly Rwf33 million at I&M Bank attracted controversy between the family of the deceased and the insurance company with the family defeating Soras in court and Soras appealing the ruling.

“The appeal has no substance” the Commercial High Court said on Thursday 31 December 2020 adding that “the decision in of the lower court is hereby maintained”

The lower court had in mid-2019 ordered the insurer to pay the loan while I&M Bank was ordered to refund Rwf2.5 million they had debited from the account of the deceased’s spouse.

In 2012, the deceased got a mortgage loan of Rwf35.6 million to be paid in 20 years.

In 2018 the 45-year-old man, upon realising that his life was shrinking under the ache of liver cancer at a time he was remaining with over Rwf32.9 million of the debt, went to Soras for a life insurance cover.

The client succumbed to liver cancer a month after he had secured life insurance at Rwf923,526 at Soras.

The insurer insists that the deceased never revealed that he was on his deathbed when he sought life insurance and that the insurance company was not informed of the loan at I&M Bank.

“The client knew that he was about to succumb to liver cancer but did not reveal it to the insurer” Lawyer Ignace Ruzindana submitted before the court adding that the client “never made it clear if the loan the insurance would cover was already running”

The 1975 insurance law invalidates any insurance contract upon evidence that one party dubiously hid some information that would affect the contract.

Lawyer Muhirwa Ngabo Audace who represented the deceased’s family made it clear that the deceased was aware that he was about to die and that he had all the medical reports about his liver cancer but the insurer was reluctant to ask for them.

“Before they entered into such a contract, they should have asked for the medical report to know the status of the life they were going to insure. Why did they not use their medics before they entered into the contract?” Lawyer Ngabo questioned.

Ngabo also refuted the allegation that the client never revealed that he already had a loan at the bank, arguing that there is no other loan that the deceased left.

“There is no basis upon which the insurer claims that they did not know if their client had a loan because it was the only loan that the deceased had” he explained.

The Commercial High Court ruled that the insurer was to cover the loan, maintaining the ruling of the lower court.

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