Mr. Chan filed a critical illness claim with his insurer for heart disease in 2022. The insurer found that Mr. Chan had received pharmacological therapy for heart disease and high blood pressure prior to taking out his policy in 2020, but he did not report these health conditions in his policy application. As Mr. Chan's medical history would have affected the insurer’s underwriting decision, the insurer declined his claim on the grounds of non-disclosure of material facts, terminated his policy and refunded his paid premiums.
Quick tips on critical illness insurance
“Utmost good faith” is an important principle in insurance contracts. An applicant is obliged to proactively and honestly disclose all critical information, including personal health condition and medical history, to the insurer during policy application. Regardless of whether the “material facts” relate directly to an illness that leads to a claim, the insurer may decline a claim or even cancel the policy on the grounds of non-disclosure of “material facts” if the insurer was unable to make a fair and accurate underwriting decision at the time of policy application because of the non-disclosure.
The insurer also assesses the validity of a claim based on the medical records issued by a medical institution(s). If you notice any incorrect information in your medical records, it is better to first request the medical institution to rectify the records and submit an updated version to your insurer for a claims review and handling.
When applying for insurance and answering the underwriting questions, if you are in doubt as to whether a certain fact (e.g. medical history or health condition) needs to be declared, it would be advisable to clarify this with your insurer. The insurer can then decide whether extra information or a medical examination is required, based on your disclosed information, to avoid having an adverse impact on the validity of the policy or claim results due to your non-disclosure of material facts.
Ms. Wong purchased a critical illness policy for her son when he was two and a half years old. Four months later, her son was assessed with developmental delay, autism spectrum disorder (ASD) and a suspected sensory problem, so Ms. Wong filed a claim with her insurer.
According to the information provided by Ms. Wong, the insurer found that her son had a lack of eye contact and social interaction and could say only simple words when he was one and a half years old. The insurer therefore concluded that ASD symptoms had already been identified and known to exist prior to the effective date of the critical illness insurance policy, so the insurer declined Ms. Wong’s claim based on the “pre-existing conditions and symptoms” exclusion.
Quick tips on critical illness insurance
The insurer will identify the high-risk features based on the information provided in the insurance application form and decide whether to take the risk and if so, what premium and terms to offer. “Pre-existing conditions and symptoms”, which are normally excluded from the coverage of critical illness insurance, mean any illness, symptom or physical condition, or any illness caused by a related physical condition that has been diagnosed or treated or is being treated, or has existed or had been known to exist by the insured person prior to the commencement of the policy. They are not covered under a policy. Carefully review the coverage and exclusions specified in a policy before purchasing it.
Many people undergo medical check-ups regularly to better understand their physical condition and identify potential health problems as early as possible. A benchmark index (e.g. blood pressure, glucose and blood fat), or doctor’s medical report, that shows the applicant’s physical condition is an important information for reference when underwriting decision is made. The insurers make underwriting decisions based on the condition and cause of any illness, the control status, and the current condition of the insured person. If it is found that certain measurement results exceed the normal index during a regular physical examination, the policyholder should declare this clearly to the insurer and disclosure all pertinent information to avoid affecting future claims.
Ms. Cheng was diagnosed with dermatofibrosarcoma protuberans (DFSP), with uncontrolled growth and clear stromal invasion of malignant cells. She subsequently submitted a critical illness claim to her insurer for her medical condition. However, the insurer rejected her critical illness claim, but paid her the early-stage malignancy benefit. The insurer stated that Ms. Cheng’s condition did not fulfil the policy definition of “cancer”, which does not include any skin cancer, other than malignant melanoma, as stipulated in the policy provision. Ms. Cheng’s DFSP was not categorized as malignant melanoma.
Quick tips on critical illness insurance
The definition of the same covered illness may vary among insurers. The policy terms contain specific descriptions of the medical conditions of the relevant critical illnesses. This means the diagnosis must fulfil the relevant terms, conditions and definitions stated in the policy to be covered and eligible for the critical illness claims. In general, most traditional critical illness policies do not cover any kind of skin cancer, apart from malignant melanoma.
Recently, the scope of coverage of many critical illness policies has been expanded to cover early-stage critical illness, such as carcinoma-in-situ and precancerous lesions. The insured person is covered if the diagnosis meets the specific description of the medical condition. In general, the benefit amount is about 20% to 30% of the insured amount, subject to the specified policy terms. Before taking out a policy, check whether the benefits cover early-stage critical illness, read the definitions of insured critical illnesses specified in the policy, and consult the insurer or insurance intermediary to ensure that the policy meets your personal needs.
Ms. Lai was diagnosed with rectal carcinoma and underwent rectal resection surgery in March 2020. Her claim for the critical illness benefit was accepted by the insurer. In September 2022, Ms. Lai was unfortunately diagnosed with lung cancer, which was secondary to her previous rectal carcinoma. Ms. Lai filed another claim with the insurer for multiple critical illness benefits.
However, the insurer declined her claim, as the lung cancer was not a new illness or unrelated to the previous diagnosis, but rather a recurrence and metastasis of her rectal carcinoma. Ms. Lai's policy specified that there was a waiting period of three years between multiple claims for such a condition, but the period between her two cancer diagnoses was only two and a half years.
Quick tips on critical illness insurance
Critical illness insurance policies typically have a “waiting period” clause. Any symptoms or diagnosis of covered illness occurring during the waiting period is excluded from the coverage.
For policies offering multiple claims, there may also be a waiting period between each claim (normally ranging from 1 to 5 years, subject to the terms of the specific policy). Make sure you understand the policy terms and conditions of the "waiting period" before taking out a policy.
The above information is for reference only. For the coverage, exclusions, benefit limits and premium levels of a specific insurance plan, please refer to the relevant policy terms.