Critical illness insurance provides policyholders with a lump sum payment if they are diagnosed with a severe medical condition that is covered by their policy. This financial relief is intended to help individuals manage the costs associated with their illness, such as medical expenses, lost income, and other unforeseen financial burdens. However, not all claims are approved. In Canada, many policyholders find their claims denied due to various reasons, often leading to financial distress and disputes with insurers.
Understanding why claims are denied can help individuals take proactive steps to ensure their claims are processed smoothly. Below are some of the most common reasons critical illness insurance claims are denied in Canada.
1. Pre-Existing Conditions and Non-Disclosure
One of the primary reasons insurers deny claims is the existence of pre-existing medical conditions that were not disclosed at the time of application. Most policies have a pre-existing condition clause, which excludes coverage for conditions that existed before the policy was issued. If an individual failed to disclose relevant medical history, even unintentionally, the insurer may classify this as misrepresentation or non-disclosure and deny the claim.
Insurance companies often investigate medical records extensively before approving a payout, and discrepancies between the application and medical history can lead to denial. Even minor omissions, such as failing to mention past treatments, symptoms, or family history, can result in a claim being rejected.
2. Failure to Meet the Policy’s Definition of a Covered Illness
Each insurance policy has specific definitions and criteria that must be met for a condition to qualify as a “critical illness.” Even if a person is diagnosed with a severe condition, the insurance company may deny the claim if it does not meet the policy’s exact wording. Due to this critical illness policies can be much more restrictive in their coverage than one might initially think.
For example, most policies cover heart attacks, but the definition typically requires specific markers such as elevated cardiac enzymes and evidence of myocardial infarction. If a doctor diagnoses a heart attack without meeting the insurer’s strict criteria, the claim may be denied.
Similarly, a cancer diagnosis must usually be invasive and life-threatening. Certain early-stage cancers or non-malignant tumors may not qualify under the policy’s terms.
3. Waiting Period Exclusions
Most critical illness insurance policies include a waiting period before coverage becomes effective. If a diagnosis occurs within this period, the claim may be denied.
Typically, policies have a 90-day to 180-day waiting period from the date of issuance before they will cover certain conditions. If a policyholder is diagnosed with a covered illness shortly after purchasing the policy, the insurer may argue that the condition was developing before coverage began. In cases where symptoms appear within the waiting period but the official diagnosis occurs later, insurers may still deny the claim, citing early onset of the disease. For many diseases, identifying exactly when symptoms began can be difficult to pinpoint with accuracy and insurance companies can and will use that to their advantage in denying claims.
4. Exclusions and Limitations in the Policy
Insurance policies often contain exclusions and limitations that prevent claims for certain conditions or circumstances. Some common exclusions include:
- Self-inflicted injuries or illnesses related to substance abuse.
- Diseases caused by high-risk activities, such as extreme sports.
- Illnesses resulting from criminal activity or participation in acts of war.
- Certain types of cancers, minor strokes, or non-invasive heart conditions that do not meet the policy’s severity threshold.
Many policyholders do not read the fine print in their contracts and may not realize their condition falls under an exclusion. Before purchasing a policy, it is essential to understand exactly what is covered and what is not.
5. Failure to Meet Survival Period Requirements
Most critical illness insurance policies have a survival period, which means the insured person must survive for a specified number of days after diagnosis before a claim is paid out. This period is often 30 days, though some policies require longer.
Understanding the survival period is crucial, especially for individuals with aggressive diseases where early mortality is a risk.
6. Disputes Over Medical Evidence
Insurance companies require substantial medical evidence to process a claim. If there is any ambiguity or lack of medical documentation, the insurer may reject the claim. Insurers often request detailed medical records, specialist opinions, and diagnostic tests to confirm the condition meets the policy’s definition. If there are conflicting medical opinions, insurers may use their own doctors to assess the case, sometimes leading to claim denial.
Policyholders should ensure their physicians provide comprehensive and clear reports that align with the policy’s requirements and with the specific language used in that policy.
If a claim is denied due to insufficient medical evidence, policyholders can often appeal the decision by providing additional documentation or seeking a second opinion.
Experienced Insurance Denial Lawyers
Critical illness insurance can provide much-needed financial relief, but claims are not always as straightforward as you may think and challenging a denial can be difficult. An important factor to consider is whether or not you can leverage a claim of Bad Faith dealing by your insurance company.
If you have a critical illness insurance claim denied, contact the experienced insurance denial lawyers at Taylor & Blair LLP for a free consultation. Our lawyers will work hard to make sure you get a fair deal.