CR310 Interpretation – Termination of cover upon a policyholder “ceasing to substantially practice his profession”

Interpretation CR310

Termination of cover upon a policyholder “ceasing to substantially practice his profession” as envisaged in policy provision.


The complainant, a marketer by profession, had been a policyholder with the insurer since about 1995. In January 2009, shortly after emigrating to Canada, he was involved in a serious motor vehicle collision in which he sustained injuries that rendered him totally, but temporarily, incapable of attending to his usual professional duties.

In the course of assessing his claim for a sickness benefit, the insurer discovered that he had been unemployed during the period covered by the claim, being 1 November 2008 to 1 September 2009. It thereupon sought to invoke the provisions of clause 4(c)(ii) read together with 4 (c) (v) of the policy contract, which stated:
“4. A Policyholder shall cease to be covered by and he shall pay no further premiums to, nor receive further benefits from this contract …

(c) (ii) at the end of the month during which the Policyholder, before reaching the mandatory termination date retires from practice, or is, in the opinion of [the insurer] no longer substantially practising his profession,…

(v) A Policyholder who retires from practice or is no longer substantially practising his profession as envisaged in section 4 (c) (ii) … shall inform [the insurer] in writing within 30 days of so having retired from practise or ceasing to substantially practise his profession. Should the Policyholder fail to so inform [the insurer], and [the insurer] only at a later stage becomes aware of the fact that the Policyholder has retired from practise or that he ceased substantially to practise his profession, [the insurer] shall cancel the Contract with retrospective effect at the end of the month during which the Policyholder retired from practice or ceased substantially to practise his profession …”

The complainant contended that although he was unemployed during the relevant period, his being unemployed was due to his having lost his job rather than to having voluntary ceased his employment. He added that although he was not earning an income he had not left his profession, but had been attending business workshops, doing market research and writing a chapter in a marketing-related book for a publishing company.

In contending that the complainant was no longer substantially practising his profession, the insurer argued that the complainant was not earning an income from his profession during the relevant period. It explained its conclusion by stating that the amount of risk cover that a policyholder enjoys is based on his gross professional income derived from the practice of his profession, and that should he stop deriving an income from his profession he no longer qualifies for cover.

As the basis for the above contention it relied inter alia on a clause in the contract that stipulated that the amount of a sick pay benefit or permanent incapacity benefit to which a policyholder becomes entitled shall not exceed two-thirds of the amount of his gross income from the practice of his profession; and another that stipulated that a policyholder who is totally or partially unable to attend to his usual professional duties on account of sickness may receive a sick pay benefit, provided that he shall furnish the insurer with such information as it may require in respect of the income earned from the practice of his profession.

The office made a provisional determination holding that the insurer had not discharged the onus resting on it to prove that the complainant had ceased to substantially practise his profession, and pointed out that:

• Clause 4 (c)(ii) and (v) do not stipulate that unless the policyholder is earning an income he will not be deemed to be practising his profession;

• The two other clauses referred to likewise do not contain any such stipulation. In fact they respectively only place a limit on the quantum of the sick pay or permanent incapacity benefit that a policyholder may receive, and stipulate the requirements that a policyholder must meet in order to qualify for and continue to receive payment of a benefit.

The insurer accepted the provisional determination.

March 2011