After Mary* died, her son Tom* made a claim to Mary’s insurer. The insurer said Mary had left out information about her diabetes, stress, high cholesterol, high blood pressure and asthma on her application; and she had not accurately recorded her weight.
The insurer offered Tom a reduced payment (to take into account the premiums Mary paid over the years if the insurer had known her full medical history), plus a goodwill payment of $10,000. Tom didn’t accept the offer.
The IFSO Scheme case manager informed Tom that the insurer was not legally obliged to make this offer. Two independent underwriters confirmed Mary’s diabetes and high cholesterol was material information – it would have affected the cover offered to Mary. They confirmed they would have charged higher premiums if her health information had been disclosed. The insurer was, therefore, entitled to decline the claim and avoid the policy on the basis of nondisclosure.
The case manager said the offer made by the insurer, which was still open to Mary’s son, was a fair and reasonable resolution.
Complaint not upheld.
*Names have been changed.