Critical Illness Claims

Unlike disability benefits claims, in many critical illness policies the analysis of whether the specific policy criteria are met is determined at the point at which diagnosis was made rather than on an ongoing basis.

As such, it is possible to have a viable critical illness claim even if you have recovered fully from your illness, and you are not impaired in any way.

In critical illness claims it is most common to see a denial take one of the following forms:

• The claimant has not met the survival period required under the policy; 

It is not uncommon to find wording in a critical illness policy that refers to a “qualifying period” or a “survival period”. The time frame of the “survival period” or “qualifying period” usually ranges anywhere from 30-90 days with 30 days being most common.

The wording in the policy often suggests that no benefit shall unless the insured survives a certain number of days after the date of diagnosis of a covered illness/condition.

• The claimant does not have a condition that would constitute a “covered condition” or “covered critical illness” under the policy; 

Critical illness policies contain a list of covered illnesses that are often defined by set criteria in the policy document. The policy wording may have been carefully designed by the policy drafters or it may be standardized wording.

To access critical illness benefits your condition needs to fit under one of the covered conditions. Insurers will often dispute that an insured has a specified condition if they do not fall within the four corners of the set criteria.

• The claim is denied based on an exclusion clause; or 

The most common denials on the basis of exclusion clauses, tend to relate to either the “pre-existing condition” exclusion or the “90 day exclusion”, both of which may relate to a period of time existing either before or after the effective date of insurance. The requirement being that the insured’s symptoms or condition/s should not have manifested during that time frame.

In order to evaluate whether an exclusion clause applies, in addition to carefully assessing policy wording, it is necessary to carefully analyze all the medical information for the period in question.

• The claim is denied due to misrepresentation or non-disclosure. 

Many critical illness policies require an applicant to complete an application when the policy is first acquired. Based on the answers provided to certain pre-set questions, insurance underwriters decide on appropriate coverage levels and the requisite premiums that are to be paid by a prospective insured.

Critical illness claims are often denied based on misrepresentation. Since medical disclosure is often required as a precondition to obtaining a private critical illness policy, this allows the insurer to conduct investigations to determine coverage eligibility/insurability and the amount of premiums to be paid by the insured to insure the risk.

There is a duty on parties seeking insurance to make true and full representation of facts which are material to the insurance risk. To be material, a fact must be one which, if fully and truthfully disclosed, would have influenced a reasonable insurer to decline the risk or set a higher premium to take on the risk.

Once a claim for critical illness benefits has been submitted, insurers will frequently investigate the claim by requesting medical records that precede the claim. The insurer will then analyze those medical records to determine whether the insured fully disclosed their health history and if not, a claim will be denied based on non-disclosure and misrepresentation. Contesting a denial that has been made based on misrepresentation is very technical and legally complex.

We have significant experience litigating against insurers that have denied critical illness claims, if you require assistance with your critical illness benefit denial, please contact our office.