The purpose of critical illness insurance

Critical illness insurance provides peace of mind coverage for someone diagnosed with a serious medical condition. Typical conditions covered by critical illness policies include cancer, heart attack, and stroke, but can also include other conditions such as Alzheimer’s disease or even blindness.

Insurance company tactics for denying critical illness claims

The pay-out is intended to reduce financial pressures while the insured copes with their illness. However, insurance companies often look for ways to deny coverage and avoid paying out on the policy. One tactic used by insurance companies is to hide behind the agent tasked with interviewing the insured at the time they applied for the policy. An agent’s lack of clarity or due diligence can jeopardize the coverage.

The role of insurance agents

That is what happened in a recent case in which an incident of medical negligence caused a plaintiff to go blind. The plaintiff had a critical illness insurance policy that was intended to provide coverage in the event of blindness; however, the insurance company denied his claim on the basis that he provided inaccurate information about his eye condition in the application forms.

When the plaintiff applied for the critical illness insurance policy, the insurance company’s agent interviewed the plaintiff about his health history. The plaintiff told the agent that although he had not been diagnosed with glaucoma, he had symptoms of glaucoma, and his doctors told him he may get glaucoma in the future. The plaintiff showed the agent the eye drops he had been taking, and the agent did not ask any further questions about it. In the application form, the checkbox “no” was ticked for the question about disorders of the eye:

Have you ever been treated for or had any indication of:

1. 1. 1. o) disorder of the eye, ear, nose, throat or mouth, blindness or deafness (excludes routine check-ups where no follow-up is required, such as tonsillectomy, adenoidectomy, sinusitis or any disorder requiring eye-glasses, contact lenses, or ear tubes).

About three years after the policy was granted to the plaintiff, one of the plaintiff’s doctors negligently changed his eye drops, which led to a sudden and catastrophic loss of vision. The plaintiff applied for payment under his critical illness policy due to his blindness.

The insurance company denied the plaintiff’s claim because his medical history was different from what was declared in the application documents.

The plaintiff brought a claim against his doctor in medical malpractice for causing the blindness and another claim against the insurance company and agent concerning the denial of his coverage.

The dispute in the insurance coverage denial case was focused on the discussions between the plaintiff and the broker and paramedical examiner. The plaintiff believed he did everything right by answering the broker’s questions to the best of his ability. He believed he had fulfilled his obligations by disclosing the risk that he may develop glaucoma, and it was the broker’s and examiner’s decision to answer “no” to the above question about disorders of the eye.

The insurance company took the position that answering “no” was misleading and incorrect because the question asked if he had “any indication” of any of the eye disorders, not whether he actually had any such disorders. Like many insureds, the plaintiff did not understand all the nuances in the application forms. He relied on the agent and examiner for that.

Fortunately, the medical malpractice and the insurance denial claims were resolved in the plaintiff’s favour, but not without a fight.

If you have been denied coverage under a critical insurance policy, it may be because the insurance company or their agents did not appreciate or explain the nuances of the application documents. If you have questions about a critical illness claim, contact us and we will be happy to review the facts of your case and give you advice on how to proceed.