Non-disclosure proper grounds to decline life insurance claim

Insurance policies,
Martin suffered a heart attack and made a claim under his life insurance policy. The bank declined the claim, saying he had not disclosed material medical information when he took out the policy.
September 2019

Martin acknowledged he had mistakenly missed out information in his life insurance application form, but that information was unrelated to his heart attack and the bank should not therefore have declined the claim.

Our investigation

We reviewed the information from Martin and his bank to determine whether he had breached the obligation to disclose all material information.

Information is material if it would influence the mind of a prudent insurer about the terms it would offer. We asked two independent insurers to review Martin’s medical information, including the impact of the missed information on the application. Both independent insurers acknowledged that one of the conditions would have needed further testing, before they could consider offering a policy, and they would have deferred cover until the testing was complete. Therefore, the information was material.

The information not disclosed must have also caused the actual insurer to enter into the insurance contract on terms other than those it would have offered had it known. The bank underwriting guidelines showed that it would not have offered Martin cover until he had undergone tests with his doctor if it had known of his condition.


We discussed our views with Martin and he withdrew his complaint.

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