When the policy pay-out is limited

Check your policy. Accident cover is not life insurance.

When the policy pay-out is limited

In 1991, Tim’s* dad Roger* applied for a “$50,000 Plan” which he believed was a life insurance policy. Roger was sent a policy schedule, a schedule of benefits and a copy of the policy wording.
In January 2009, Roger suffered from heart failure and died.
Roger’s estate made a claim to the insurer under the policy. The insurer declined to pay the estate the Accidental Death benefit of $50,000 under the policy, because Roger died from natural causes. The insurer paid the estate the “death by any cause” benefit of $500. From Roger’s will, it was clear that he had believed the insurer would pay his estate $50,000 when he died. Roger’s estate argued they should be paid the $50,000 life insurance policy Roger signed up to.
As Roger died from natural causes, the insurer was not liable to pay his estate $50,000 under the policy. The schedule of benefits in the policy stated that the “accidental death” benefit of $50,000 was payable if the insured died as a result of an “accident” and, when an insured died “by any [other] cause”, the amount payable was $500.

Complaint not upheld.

*Names have been changed.

See the full case study.