Critical Illness Insurance – What You Need to Know

Critical illness insurance has been available for a number of years and provides a purchaser with financial security should a serious illness occur. This type of insurance provides coverage for certain prescribed illnesses which may include life threatening cancers, Alzheimer’s disease, blindness, heart attack, MS, Parkinson’s disease, HIV or stroke, as well as many other conditions or illnesses. Critical Illness Insurance policies vary in many aspects and particularly with respect to the nature of the critical illnesses covered under the policy.

The purchaser will be required to complete an Application for Insurance as well as a Medical Questionnaire. The purchaser will be required to answer numerous and complex questions about his or her medical history. These questions may be open ended, meaning the purchaser may be required to give a “complete” medical history (spanning their lifetime), which will include any and all doctors, medications, treatments, consultations, blood tests, diagnostic imaging and diagnoses. Failure to provide a “complete” medical history may result in a denial of a future critical illness claim if the medical history was not complete. The insurer will allege that information not provided at the time of Application, Medical Questionnaire, physical examination or at the time of the delivery of the policy was a misrepresentation of the applicant’s medical history and as a result the policy is void even if the missing information is unrelated to the critical illness causing the claim. For this reason, it’s vital to consult with a personal injury lawyer to understand your rights.

The Insurer may take the position that had it been informed of the omitted medical information that it would not have sold the policy to the applicant as it would have assessed the risk differently. For example, the applicant develops life threatening cancer and files for pay out on the policy. The life threatening cancer is an approved critical illness but because the applicant failed to note diagnostic testing for diabetes some time in his or her past, the insurer denies payment on the basis of misrepresentation of the medical history. The Court has found in certain cases that omitted medical information need not be related to the critical illness being claimed in order for the insurer to successfully deny the claim. To protect against this result, we recommend providing the insurer with a copy of your medical file from your family physician so that the insurer can satisfy itself with respect to your health at the time of application. This will reduce the chances of a denial of benefits based upon misrepresentation of the prior medical history.

Insurers are notorious for only requesting the medical records at the time of claim rather than at the application for the very purpose of supporting a misrepresentation allegation.

To avoid the potential of a future critical illness claim denial we recommend the following:
As a purchaser of Critical Illness Insurance you should expect and demand that the insurance agent provide you advice and information about the policy prior to purchase. You should expect and demand that the insurance agent advises you of the risks which are covered and are not covered under the policy in detail. You should expect and demand that the insurance agent informs you of the consequences of failing to provide a complete medical history. You should expect and demand that the insurance agent reads each and every sentence of the Application and Medical Questionnaire at the time of Application, as well as going through the policy with you in detail when it is delivered to you.

It is important to determine whether the policy excludes payment if the illness being claim for existed prior to application, or whether the policy permits the insurer to deny the claim merely if there was a symptom of the critical illness being claimed for prior to application. In the Court of Appeal case of Duke v. Clarica, the claim was denied because the applicant had a minor undiagnosed symptom associated with Parkinson’s disease prior to application. The Court found that neither the applicant nor his physicians had associated this symptom prior to issuance of the policy with the Parkinson’s disease he was later diagnosed with. The wording of the policy was found to be ambiguous with respect to symptoms and as such the insurer was required to pay the claim.

Should your critical insurance claim be denied, do not assume that you have no legal recourse.

We are on top of the law to ensure that our clients maximize their settlement.

At Himelfarb Proszanski, we build winning cases. That’s the HimPro Advantage™.