critical illness – OLHI – Free, impartial help with your life & health insurance complaints

Ms. K. adopted her daughter and enrolled her in a child development program (CDP), as recommended by the adoption agency.

At the CDP, an assessment showed motor problems, including an irregular gait. The next month, Ms. K. applied for critical illness for her daughter. In the telephone interview portion of the application, she said that her child had not been diagnosed or treated for development delays or bone, joint or muscle disorders. Ms. K. also said that her daughter did not have any other illnesses or conditions, and received no consultations or treatment from alternative health care providers.

Four days later, the physiotherapist at the CDP told Ms. K. that the child’s motor skills were of concern. Later that month, as a part of the insurance application, Ms. K. signed a declaration of good health. She confirmed, again, that since beginning the application, her daughter had not consulted with doctors or any other health care providers, nor had she undergone any diagnostic tests or investigations. Ms. K.’s daughter was approved for a $100,000 critical illness policy.

Two years later, a pediatrician outside the CDP diagnosed the daughter with cerebral palsy and Ms. K. applied for the policy benefit. The insurance company denied her claim for failing to disclose material facts during the application and in the declaration of good health. They provided a full refund of the premium.

When Ms. K. contacted OLHI, a Dispute Resolution Officer (DRO) carefully reviewed all the files sent by her and the insurance company. The DRO spoke with her to better understand her position. Ms. K. felt the CDP did not provide medical diagnoses – and the daughter was diagnosed long after the policy was issued.

OLHI agreed that the insurance company’s decision was sound. Although Ms. K. may have honestly believed that her daughter was in good health until long after she applied for the insurance, she incorrectly answered questions related to evaluations, investigations or consultations with health care providers or practitioners. These evaluations and consultations did take place at the CDP.

 

Disclaimer: Names, places and facts have been modified in order to protect the privacy of the parties involved. This case study is for illustration purposes only. Each complaint OLHI reviews contains different facts and contract wording may vary. As a result, the application of the principles expressed here may lead to different results in different cases.

Mr. F., diagnosed with cancer, made a claim on a Critical Illness insurance policy. If his claim was accepted, the insurance would have paid off a $10,000 loan he had taken out with his bank. His claim was denied on the basis that he did not have Critical Illness insurance coverage on the loan.

Mr. F. received his insurer’s final position letter and contacted an OLHI Dispute resolution Officer (“DRO”), seeking an independent review of his complaint.

During several conversations and exchanges of emails, our DRO learned that Mr. F., who had a prior line of credit that covered him for Critical Illness, converted this into a new loan a short time before making the claim. The bank denied his claim because this new loan was not insured for Critical Illness and he was diagnosed with cancer after the new loan was made.

Mr. F. claimed that he was diagnosed in early April and that the new loan was not taken out until later that month. Therefore, the coverage from the previous line of credit should be applied to pay out his claim. Meanwhile, the insurer stated that its denial was based on medical reports indicating that the cancer was not diagnosed until June, long after the line had been closed and replaced with a loan that did not provide Critical Illness coverage.

During his review, the DRO assessed that there were conflicting dates in the medical reports relating to the diagnosis date. He also questioned why Mr. F. would have taken out a new loan when he was ill, since that would result in him becoming ineligible for Critical Illness coverage under the new loan. As a result of this, the DRO recommended that the complaint be escalated for further investigation by an OLHI OmbudService Officer (“OSO”).

The OSO poured over medical records, as well as the insurer’s file and the consumer’s documents, and had several conversations with all parties. The focus of his review was to determine whether a diagnosis had been made before the cancellation of the Critical Illness insurance coverage on the prior line of credit. Medical records showed that the confirmed date of diagnosis was in fact in June, two months after the old line of credit was closed and the new loan opened.

While written communications in early April between Mr. F.’s doctors showed mention of cancer, it was referred to as a suspected illness requiring further investigation and formal confirmation. Because insurers pay Critical Illness benefits based on clear diagnoses, not suspected conditions, his insurer would not have paid out the claim in April.

The OSO, through his investigation, also learned why Mr. F. took on a loan that wouldn’t provide critical illness coverage at a time when he needed this coverage most: Mr. F. admitted that, when speaking with the bank to set up the new loan, he did not advise that he might have cancer.

Because the bank did not have this information, they could not advise him to keep his current lines of credit, which provided Critical Illness, rather than taking on a loan that did not provide this coverage.

As a result, the OSO recommended to Mr. F. and the insurer that the original claim denial should be upheld.

 

Disclaimer: Names, places and facts have been modified in order to protect the privacy of the parties involved. This case study is for illustration purposes only. Each complaint OLHI reviews contains different facts and contract wording may vary. As a result, the application of the principles expressed here may lead to different results in different cases.

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