CR76 Premium waiver benefit admitted and later terminated on review
Premium waiver benefit admitted and later terminated on review – whether cessation of benefit justified.
The complainant was a teacher who suffered from major depressive disorder. Because of his condition and his inability to continue working the Education Department granted approval for him to retire in March 1999.
The complainant had a policy with the insurer which, amongst other benefits, included a waiver of premium benefit. Following his early retirement the complainant applied to the insurer for the waiver of premium benefit to be instituted. In July 1999 the insurer informed the complainant that the waiver of premium benefit had been approved for a period of two years; it was reassessed and approved for a further period of two years in July 2001. In May 2003 the insurer sent a letter to the complainant advising him that the waiver of premium benefit had come up for review but the letter was apparently not received by the insured; the benefit was then terminated. When the insured communicated with the insurer in November 2003 the claim was referred to the insurer’s Chief Medical Officer. He expressed the opinion that the insured was not totally and permanently disabled and while the insured could not perform his own occupation, he was not incapable of performing any other occupation. This opinion apparently was influenced by the disability claim medical report of the insured’s doctor who, in response to the question “Do you consider that the disabled is at presently totally incapable of performing … any occupation whatsoever, irrespective of ability?” had responded “No”. In explanation thereof he had indicated that the insured was capable of “creative handwork”.
The complainant approached our office for assistance.
In terms of the policy the requirement for the premium waiver benefit was that the life assured and the payer of the premiums (being one and the same person)
“has become totally and permanently disabled and as a consequence of which has been wholly and continuously prevented from engaging in any business or occupation and from performing any work for remuneration, compensation or profit for a period of six consecutive months (and in the opinion of the company will continue to be so prevented permanently)”.
We noted that the insured’s doctor had, on each instance that the matter had come up for review, furnished the insurer with a disability claim medical report. The same answers given by the medical doctor in 2003 had been given in the 2001 report. Despite the fact that the medical doctor had indicated that the insured was capable of “creative handwork” in 2001, the insurer had made the decision to continue payment of the benefit.
When we asked the insurer to advise us what creative handwork this could consist of, how and whether any remuneration could be earned for such creative handwork and whether the complainant had had any previous experience of performing creative handwork, the insurer replied that since the complainant had provided the occupation of “creative handwork” to his medical attendant, the complainant was in a position to provide the specific details as to how, where and when this occupation was to be performed and whether he was able to derive an income from it. However we pointed out that there was no evidence that the complainant had provided this occupation to his medical attendant. It appeared to us to be the medical attendant’s opinion which had been expressed since, in the form filled in by the complainant, he clearly indicated that he had been incapable of working since 1998.
We furthermore pointed out to the insurer that if it sought to rely on an alleged implied ability to perform creative handwork as a reason to repudiate the claim, it should be able to demonstrate that creative handwork is a business occupation or work as distinct from a part-time activity or hobby, and that the activity deemed to be a business, occupation or work would generate an income enabling the insured to earn a living.
It was clear from the earlier assessments that the complainant had major depression and personality dysfunction and we pointed out to the insurer that one would have expected a full evaluation by a psychiatrist to be done before determination of the benefit on review, rather than reliance on a one line opinion expressed by a general practitioner.
The insurer reviewed its earlier decision and decided to admit the waiver of premium benefit up to the policy maturity date.