These case studies have been modified so as not to identify any actual cases at FIDReC. They are provided for purposes of learning and are not necessarily indicative of outcomes at FIDReC.
Jane’s mother suffered from kidney failure and was going through dialysis. Her grandmother had kidney disease as well. Knowing the importance of insurance for serious illnesses, Jane bought a comprehensive Critical Illness (CI) term plan. The CI policy covered early, intermediate and advanced stage CI.
At the point of sale, the Agent went through the Benefit Illustration and Product Summary to explain the CI policy. Jane expressed her concerns about her family history, particularly regarding kidney disease, and asked the Agent whether the CI policy would cover kidney disease. The Agent referred her to the policy terms, which stated that there was an early-stage benefit for kidney failure if: (1) one kidney was surgically removed; or (2) a specialist makes a diagnosis of chronic kidney disease where renal function is permanently impaired. The Agent sent the terms of the CI policy to Jane along with other sales documents subsequently.
Several years later, Jane consulted a dermatologist when she observed a red spot on her skin near her eye. The dermatologist diagnosed Jane with Stage 0 non-invasive melanoma. This was an early-stage cancer. The dermatologist performed surgery to remove the melanoma.
Jane recalled that the CI policy had early-stage cancer benefit and proceeded to file a claim. But the insurer rejected the claim because the CI policy excluded non-invasive melanomas. Jane appealed to the insurer without success and filed a claim at FIDReC.
Despite the efforts of the mediator, the parties could not reach a resolution. Jane then referred her case to adjudication.
During the adjudication, Jane argued that the Agent had not told her about the exclusion for non-invasive melanomas. She complained that the policy booklet was more than 50 pages and was hard for her to understand. She bought the CI policy because she wanted protection from early-stage CIs. Accordingly, she wanted the insurer to allow her claim.
The Insurer explained that although the policy provided an “Early-Stage Cancer Benefit”, this did not mean that it covered all forms of early-stage cancers. The CI policy booklet set out the details of what the policy included and excluded.
The Adjudicator examined the sales process and the policy terms. The Adjudicator agreed that the policy terms were difficult for a typical consumer to understand. However, this did not mean that the consumer was not bound by the policy terms. The Adjudicator noted that Jane could have asked the Agent if she had concerns about any of the terms. She had in fact done this for the scope of coverage relating to kidney disease.
Additionally, the Adjudicator found that the policy documents clearly stated the exclusions relied on by the insurer. There was no evidence that Jane had concerns about early-stage cancer benefits at the point of sale. The Adjudicator dismissed Jane’s claim.
Key Learning Points
- The policy terms are critical in determining whether an insurance claim is successful. It is important to pay attention to the conditions of cover and any exclusions. Please note that exclusions can be specific to certain conditions or generally applicable.
- The insurance application form usually contains a statement that you have read and understood the policy terms. Do seek clarification or raise questions with the sales
representative or the insurer before buying a policy. - After purchasing a policy, policyholders will receive a copy of the policy terms. This may be in hardcopy or softcopy. It is the policyholder’s responsibility to review these documents. There is a 14-day freelook period where you can cancel the contract without penalty.
- For CI policies, each insurer has the commercial discretion to design coverage for early or intermediate stage CI. The Life Insurance Association of Singapore only sets definitions for advanced or severe CI. Please ensure that you compare different policies before making your decision. One tool for this is the CompareFirst website that allows you to compare Direct Purchase Insurance products offered by different insurers.
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