Brendan came to us via a referral from a disability organisation. He and his wife were looking for advice about a claim for income protection benefits under a policy of insurance which had lapsed after his cancer diagnosis. We provided Brendan and his wife with advice and assistance in relation to his income protection entitlements and an entitlement to a terminal illness payout.
The lapsed disability insurance policy provided cover for both income protection and death insurance benefits and had been active for around 8 years. Brendan advised that he let it lapse because he was concerned about the cost of the cover and the impact the premiums were having on his superannuation account balance.
Diagnosis that led to claiming disability insurance
Prior to the disability insurance policy lapsing, Brendan was diagnosed with stage 4 bowel cancer. Brendan was working full-time immediately before his diagnosis and continued to work on and off after the diagnosis (around medical treatment and when he was well enough to work).
Issues with the income protection claim
Whilst the policy was still active, Brendan successfully claimed income protection benefits for some periods where he was unable to work due to his illness. When he first approached Berrill & Watson, he was looking for help to restart the income protection payments, which had stopped.
We investigated and worked out that the income protection payments had stopped because he had returned to work and stopped giving the insurer the documents they needed to assess the income protection claim.
To continue to be paid income protection benefits, you usually must be unable to work due to illness or injury and must be not working at the time you are receiving any IP benefits. Usually, if you are claiming and being paid income protection benefits but return to work, your payments will stop, and you can claim again if your return to work doesn’t last.
However, because Brendan had returned to work and was working, and the policy lapsed before he stopped working again, reinstating his income protection benefits was (in his case) not possible.
Success with a terminal illness claim
After the difficulties with the income protection claim, we found a possible claim for a terminal illness benefit linked to Brendan’s income protection insurance cover.
A terminal illness benefit is the early payment of a death benefit which can become payable when a person is certified as having less than 12 or 24 months to live.
At the time that we spoke to Brendan and his wife, they were unsure about his prognosis and life expectancy. We advised them that if Brendan’s doctors would sign off and certify that Brendan became terminally ill before the insurance policy ceased, they would be able to claim an early payment of the lump sum life insurance benefit as a terminal illness benefit. Under this policy, terminal illness meant that doctors needed to certify that Brendan had less than 24 months to live because of illness.
Terminal illness claim pays out $1,200,000
We were able to work with Brendan’s wife to get medical evidence from his doctors, which supported that he was terminally ill, as defined in the policy before the policy lapsed in October 2022.
Unfortunately, Brendan passed away before the claim was approved. However, the terminal illness claim was able to go ahead as a posthumous claim with instructions from Brendan’s wife, the policy beneficiary.
We won this claim, and Brendan’s wife was paid a terminal illness benefit of approximately $1,200,000!
Insurer resisted the medical certifications
There was some resistance from the insurer in accepting the terminal illness certifications because they were completed after the policy lapsed (and in some cases after Brendan died).
Sometimes insurers will say that these later medical statements cannot be used to support a terminal illness claim. These same arguments about “later completed medical statements” is sometimes also relied on by insurer’s when assessing TPD claims and trauma insurance claims.
However, we were able to make arguments in favour of accepting the certificates based on the policy terms, previous Australian Financial Complaints Authority (AFCA) decisions and the relevant case law.
Get help from a disability insurance lawyer
We have a lot of experience running retrospective and posthumous terminal illness, TPD, trauma and income protection claims. Resistance from the insurer to accepting backdated certificates is common, but in most cases, the law is clear that the certificates can be relied on to support a claim.
Contacting Berrill & Watson
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