The Australian Financial Complaints Authority (AFCA) rejected a claim for a terminal illness benefit because there was no evidence that the complainant, although seriously ill, had a life expectancy of less than 12 months.  The policy only covered death and terminal illness.  There was no cover for disability or serious illness.  A terminal illness was defined as “a confirmed diagnosis by a medical practitioner approved by us of a terminal illness where life expectancy, after taking into account all reasonably available treatment, is 12 months or less”.

The insured suffers from gastroparesis and has to get nutrition through a feeding tube into her intestine.  Although she is very unwell, her GP reported that her life expectancy is more than 12 months and none of the other doctors had given an opinion on life expectancy.

The complainant said that the doctors cannot predict the future.  The AFCA said “that is true, but they can give their professional and expert opinion on what is likely to happen”.  If, at some time in the future, the complainant’s condition deteriorates her doctors might be prepared to certify that her life expectancy is 12 months or less and she will be entitled to have her claim reassessed on the basis of updated medical opinions.

The insurers had treated the insured fairly and gave her a $20 000 advance payment even though it had no obligation to do so.  There was no fairness in requiring the insurer to pay further amounts to the insured.

The AFCA remarked that “fairness requires that the reasonable expectations of the parties be met.  Usually, that means that an insurer will only have to pay if the policy requires it”.

Case No. 766085 re Complainant and Swiss Re Life & Health Australia Limited