SERVICE: Income Protection
OUTCOME: Not upheld
Issues: Scope of cover
Summary: Ms M’s* complaint was not upheld, because she did not meet the criteria for the benefit in the policy.
Ms M held life insurance cover.
Ms M made a claim to the insurer, because she had cervical myelopathy secondary to myelopathy, secondary to severe stenosis in her neck, the result of which was going to be eventual unavoidable paralysis.
The insurer declined the claim and said Ms M’s condition did not meet the policy criteria, because she was not incapacitated to such an extent that it was unlikely she would never work again, and because she was still working 30 hours per week. The insurer also considered whether Ms M qualified under the daily tasks part of the policy. However, the insurer said that only applied if Ms M was not employed for monetary reward.
Ms M complained that the insurer’s interpretation differed from the policy wording. She said the insurer misinterpreted her doctor’s comments and, in fact, the medical evidence was that there were risks to the surgery which were proposed for her, her existing disability was permanent, and her condition was going to progress. Ms M said, while she was not in a care home, she required more and more help with daily tasks. She told the case manager she had to reduce her work hours to 12 hours per week due to her developing condition.
The case manager’s assessment
If Ms M met the criteria of either of the two definitions of Total and Permanent Disablement in the policy, the insurer had to pay her the benefit.
· The first TPD definition
Under the first TPD definition, the insurer had to pay Ms M the TPD benefit if, as a result of a sickness or disease, she had been continuously absent from her employment for a period of 6 consecutive months, and she had become incapacitated to such an extent as to be unlikely ever to engage in or work for monetary reward in any occupation for which she was reasonably qualified by education, training or experience.
However, the first TPD definition did not apply unless an insured had been working more than 25 hours per week. Because Ms M was working 12 hours per week, the first TPD definition did not apply. Even when Ms M was working more than 25 hours per week, she would have only qualified under the first TPD definition if she had a period of 6 consecutive months where she was unable to work. Because she did not stop working for 6 months, the insurer was not required to pay the benefit under the first TPD definition.
· The second TPD definition
Under the second TPD definition, if Ms M had not been employed for monetary reward, the insurer had to pay the benefit if her disability meant she was confined to her home under medical supervision, or a recognised medical institution under regular medical care, and if she was unlikely to ever be able to undertake 3 or more of the listed daily activities, and if there was evidence that Ms M would never have been able to engage in any occupation or employment for monetary reward.
Because Ms M was employed when the complaint was made, she did not meet the criteria of the second TPD definition.
As such, the insurer was able to decline the claim because Ms M did not meet the criteria for the benefit.
*Name has been changed
Complaint No: 00231642