CR182 Dread disease benefit claim


Dread disease benefit claim – insurer refused claim, as condition did not qualify, but was only prepared to offer more life cover at substantially higher rates


The complainant, Mrs M, took out an insurance policy in 2001. In 2004 she was diagnosed with breast cancer. A mastectomy was performed and she submitted a claim under her policy. Cancer is defined in her policy as follows: “The manifestation of a malignant tumour, characterized by the uncontrolled growth and spread of malignant cells and the invasion of normal tissue, and which requires major surgery and/or chemotherapy and/or radiotherapy.”

The insurer took the view that “the crux of the matter is that the breast cancer was in situ, had not spread and was not characterized by the uncontrolled growth of malignant cells and the invasion of tissue.” Based on this view, the insurer declined the claim.

The complainant then applied for more life cover and terms were offered at substantially higher rates, as “there is a history of illness, namely breast cancer… The client has been placed in a high-risk category and will be loaded accordingly.”

The complainant referred the matter to our office for assistance, as she was unhappy with the conclusion that her condition did not qualify her for the dread disease benefit but that life cover would only be offered to her at substantially higher premium rates.


We referred the matter to an independent medical consultant for an opinion and he stated the following in his report:

“I would therefore not contradict the insurer’s rejection of the claim, as the contractual criteria defining cancer have not been fulfilled. However, this case is somewhat unusual, in that the extent of cancerous ductal cellular change was scattered and widely spaced, and that in addition, a second focus of lobular carcinoma in-situ, with a worse prognosis was found, causing the surgeon to proceed to a mastectomy operation.

Possibly also worthy of consideration, is Mrs M’s allegation that she had been offered four-fold premium-loading by [the insurer] at her recent application for more life cover. This would support her impression that the insurer, while trivializing her claim for cancer, considers the event to be of major prognostic significance when offering further insurance.”

A copy of the report was provided to the insurer.


The insurer made an offer of 50% of the dread disease benefit to the complainant, which she duly accepted.

November 2006