Many policies of insurance (including mortgage protection insurance) contain a broad pre-existing condition exclusion. This means that a claim brought under the policy may be excluded if the claim is for a medical condition which had existed prior to the policy being taken out. With this client, the insurer initially considered denying the claim due to a pre-existing condition exclusion clause in the policy. We were able to argue in our client’s favour, delivering a successful insurance payout.
Mary [a pseudonym] came to us in February 2024. She had been nominated as executor of her brother’s estate as he had tragically passed away due to a drinking problem.
Mary had submitted a death benefit claim under her late brother’s mortgage insurance policy. The insurer had indicated to her that they required all her late brother’s medical records and may decline the claim on the basis that her late brother’s drinking problem was a pre-existing medical condition.
Mary sought advice from us about her options. We took over the conduct of the death benefit claim and were able to get the claim approved within two months.
The pre-existing condition issue with this claim
In this case, the pre-existing condition exclusion was unusually specific in that it stated that the insurer would not pay a death benefit claim if it was for a condition for which the deceased had a medical consultation in the 12 months before the policy was taken out.
We obtained a complete copy of Mary’s late brother’s medical records and Medicare records for the 12 months prior to when his policy was taken out. Upon review of these records, we determined that Mary’s late brother had not consulted a doctor with respect to his drinking problem.
We advised Mary that the pre-existing condition exclusion should not apply to the claim and the claim should be successful. Mary engaged us to take over the conduct of the claim and we made submissions to the insurer that they were not entitled to apply the pre-existing condition exclusion.
Successful payout of the mortgage insurance policy
We were able to get the mortgage insurance claim approved within 2 months of being engaged. As a consequence, Mary was paid a substantial death benefit in excess of $500,000, which paid off her late brother’s mortgage. There was also an amount left over of $25,000, which was paid into Mary’s late brother’s estate.
Delays and misinformation also led to an interest payment
While running Mary’s death benefit claim we noticed that there was a significant period of over five years during which the insurer had represented to Mary that her late brother’s insurance had never commenced and was therefore not claimable.
The insurer later confirmed this was an error and the insurance had, in fact, commenced and was claimable.
We asked that the insurer pay interest on the death benefit for the unreasonable delays caused by their error.
We were able to get the insurer to agree to pay Mary an additional $110,000 in interest.
Because Mary chose to engage us to represent her with the mortgage insurance claim, she ultimately had her late brother’s mortgage paid off, and a further $135,000 was paid into her late brother’s estate.
The importance of getting legal advice
Had Mary not sought legal advice, the insurer may have declined the claim in reliance on a pre-existing condition exclusion in circumstances where they were not entitled to.
A pre-existing condition exclusion is just one of many tricky insurance policy issues which insurers can rely on to decline a claim.
This case is a good example of why it is important to seek advice from a specialist lawyer as early as possible, ideally before an insurer makes a decision on a claim. From our experience, the earlier clients seek advice from us, the more likely we are to be able to assist and achieve a successful outcome for them.
Get help from a specialist insurance lawyer
This death benefit payout has changed Mary’s life. If you’re having difficulties with your insurance claim, including:
- TPD claims;
- Income protection claims;
- Trauma claims;
- Death benefit claims;
- Delays by the insurer;
- Appealing a rejected claim; or
- Any other insurance-related issues,
get in touch for some free advice. It costs you nothing to find out where you stand, and we run claims on a “no win, no fee” basis.
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