Mr. and Mrs. J. purchased life insurance which would pay for their funeral expenses. Two years later, Mrs. J. died of cancer and the family incurred funeral expenses of approximately $7,500.00. In due course, a claim was submitted to the insurance company for payment of these expenses. In accordance with normal practice, the insurer undertook a review of Mrs. J.’s health history to determine whether she had accurately reported this on her insurance application.
The claim was refused based on the insurer’s belief that Mrs. J. had incorrectly answered a health question on the policy application. Specifically, she answered “no” to the question: “During the past three (3) years, has the Applicant ever been treated for, or been diagnosed as having… both high blood pressure and diabetes together?” Had the question been answered accurately, the insurer would not have provided the insurance.
While it was acknowledged by Mr. J. that his wife suffered from diabetes, she had never been told that she had high blood pressure. On the other hand, the insurer was relying on a note in a hospital discharge summary (for arm surgery) stating that Mrs. J. had hypertension and was actively taking a medication for the treatment of angina and high blood pressure. Based on this information, the insurer felt that Mrs. J. should have answered “yes” to the question on the application.
Mr. J. was surprised to learn that his wife had high blood pressure and he took the insurer’s letter to their family doctor. The doctor confirmed that Mrs. J. did not have this condition. He also disputed the insurer’s information on Mrs. J.’s prescribed medication. The doctor had prescribed the medication for Mrs. J.’s diabetes, not high blood pressure, although the medication was commonly used to treat both conditions.
Mr. J. brought his complaint to the OmbudService and a Dispute Resolution Officer (DRO) reviewed the file. In light of the family doctor’s information, the DRO suggested that Mr. J. obtain a report from the family doctor describing her medical condition at the time she completed the application for the insurance. In this report, the family doctor confirmed that Mrs. J. did not have documented hypertension and that he had prescribed the medication for diabetes, not high blood pressure as alleged by the insurer. He expressed the opinion that her blood pressure may have been temporarily elevated due to the arm surgery and confirmed it had returned to normal after she recovered from the surgery.
OLHI forwarded a copy of the family doctor’s letter to the insurer with a request for it to review its decision. Upon reviewing the doctor’s letter, the insurer agreed that Mrs. J. had made correct disclosure of her health conditions on her insurance application. This resulted in the insurer paying the full benefit under the claim.
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.