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【Will It Pay Out?】Life insurance dispute cases unpacked: key details revealed.
Although life insurance has very few exclusions, this does not mean that there are no disputed claims—some have even ended up in court, with the court ultimately ruling in favour of the insurance company, which was not required to pay compensation. To understand the claims criteria for life insurance, in addition to carefully reading the life insurance product information, policy terms and conditions, you can also refer to real-life cases. 10Life has prepared four life insurance cases for you and consulted legal experts to share the legal disputes and technical issues involved in a clear and accessible way. In future, we will also analyse cases involving other types of insurance, so stay tuned!
Case 1: Mr Chan bought a life insurance policy. Six months later, he fell from a building and died while cleaning windows. Can the insurance company refuse to pay on the grounds that Mr Chan committed suicide?
At present, most insurance companies classify suicide within the first one or two years after a life insurance policy takes effect as an exclusion (exclusion). In other words, if Mr Chan in the above case did in fact die by suicide, the insurance company may refuse to pay compensation. However, the burden of proving that the death was caused by suicide rests with the insurance company. If the deceased left no obvious evidence, such as a suicide note, it is not easy for the insurance company to prove that the deceased died by suicide. If the beneficiary disputes the insurance company’s decision regarding the claim, they may ultimately lodge a complaint with the Insurance Authority and request that it review the case.
Case 2: Ms Wong bought a life insurance policy five years ago, naming her five-year-old daughter as the beneficiary. Recently, Ms Wong was involved in a traffic accident caused by drink-driving and died after spending a week in hospital. Will the insurance company refuse to pay on the grounds that Ms Wong was drink-driving?
As we pointed out in an earlier article, life insurance generally places little emphasis on the insured peril (the cause of death), so the cause of death usually has little impact on a life insurance claim. In fact, most term life insurance products on the market cover death resulting from AIDS, illegal activities, suicide (one to two years after the policy commencement date), overdose of medication, alcohol and drugs. However, some term life insurance products have added exclusions, contrary to usual practice. Therefore, when purchasing term life insurance, consumers should not only compare premiums, but should also pay attention to the exclusions and do a little more research. In Ms Wong’s case, whether the insurance company will accept the claim depends on the exclusions under her policy.
Case 3: A convicted terrorist bought life insurance and subsequently died of cancer. Would the beneficiary of his life insurance (his wife) receive compensation?
This was a real-life case that occurred in Canada. In brief, the Ontario Court of Appeal ruled that the insurance company was not required to pay the beneficiary. This was because, when purchasing the insurance, the beneficiary’s deceased husband (the policyholder) had not disclosed to the insurance company that he had previously been convicted in another country for involvement in terrorist activities. These included firing live ammunition at and throwing grenades at an aircraft operated by an Israeli airline many years earlier, resulting in at least one death. He was later released during a hostage negotiation, moved to Lebanon and subsequently smuggled into Canada.
Court documents showed that, shortly after the insured purchased life insurance in Canada, he told the local authorities that his life would be threatened if he were deported to Israel. This showed that he clearly understood that his past activities, as well as entering Canada illegally under a false name, posed a serious threat to his personal safety. It also indicated that the policyholder had deliberately concealed his past activities from the insurance company and failed to disclose material facts, which was sufficient to constitute fraud. The court ultimately ruled in favour of the insurance company.
It is worth considering whether someone who has committed a crime is unable to buy life insurance. If committing a crime meant that no compensation would be paid, this would probably not reflect the facts. In fact, as mentioned in our earlier article, the vast majority of term life insurance policies cover illegal activities and even war.
Case 4: A diabetic successfully bought life insurance from an insurance company by using a fake medical certificate from a foreign hospital. After the insured died, the insurance company discovered something suspicious while processing the claim. The truth eventually came to light, and the company refused to pay. Was the insurance company’s decision reasonable?
Insurance contracts are governed by the principle of “Utmost Good Faith”. Even if the insurance company has not asked the policyholder for information, the policyholder must disclose all material information to the insurance company. Therefore, if a policyholder misrepresents or fails to disclose their health condition, preventing the insurance company from making a fair and accurate underwriting decision at the outset, the beneficiary may consequently be denied compensation.
If you have any insurance-related legal questions, please email them to legalcorner@10life.com. 10Life will forward the questions to a solicitor for answers, helping you understand the protection afforded to you by law. Terms and conditions:
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Although there are many types of life insurance available on the market, 10Life has rated the products for you. To compare the relevant products, please use 10Life’s Product Decoder:
- Compare term life insurance
- Compare whole life savings insurance
Further reading:
〈Why are there particularly few exclusions in life insurance? Comparing the coverage and exclusion principles of life insurance and general insurance〉
Note: The above information is provided by 10Life, updated as at 13 August 2021, and is for reference only. It does not constitute sales advice.
This English version of this article has been generated by machine translation powered by AI. It is provided solely for reference purposes. In the event of any discrepancy or inconsistency between this translation and the original Chinese version, the Chinese version shall prevail.
10Life Editorial Team
Our team of professional content researchers focussing on insurance
10Life Editorial Team
Our team of professional content researchers focussing on insurance
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10Life Product Comparison and 10Life Insurance Ratings are developed by 10Life Financial Limited, an authorised insurance broker company licensed with the Insurance Authority under License Number FB1526. 10Life Product Comparison and 10Life Insurance Ratings are developed for generic customer segments using mathematical calculations based on product information, facts and data, and are not influenced by any partnerships with or fees received from insurance companies. Any information on 10Life Platform ("10Life Information"), including but not limited to Product Comparison, Product Ratings, Blog Articles are intended for general education purpose and reference only. None of the 10Life Information is intended, nor should they be considered or relied upon, as regulated advice, insurance, financial, investment or professional advice, recommendation, approval, endorsement, invitation or solicitation in respect of any insurance, financial or investment products. 10Life Information does not take into account your individual needs. Reading 10Life Information should not be considered as conducting a suitability assessment, and is not sufficient to form the basis of any decisions to purchase any insurance products. You should rely on information authorised by insurance companies, carry out your own research and/or seek independent advice from licensed intermediaries before purchasing any insurance products or making any insurance decisions. While reasonable effort is used when collecting, validating and updating 10Life Information from various channels, none of 10Life Group and its subsidiaries, affiliates, agents, directors, officers and employees will be responsible for any liability, claim or loss arising from or associated with you using 10Life Information. No warranty, representation or guarantee is given by 10Life Group and its subsidiaries on the accuracy, completeness and timeliness of the information. If you have any questions on 10Life Product Comparison and 10Life Insurance Ratings, please email us at enquiries@10life.com
