IFA blasts Canada Life over two-year tumour claim battle
Adviser claims patient forced to quit his job after refusal to pay out on income protection policy.
A brain tumour patient has been forced to quit his job after Canada Life refused to pay out over a group income protection policy, an adviser has claimed.
Richard Kafton, managing director of London-based Cedar House Financial Services, claimed the insurer refused to cover the former IT telecoms company employee because it believed the generic occupation definitions listed on the policy would make it possible for him to return to work.
Mr Kafton said: “As a practitioner of 30 years’ service, this is probably the worst claims experience I have had over that time. It appears Canada Life has done everything possible to wriggle out of honouring this client’s claim.”
A claim was first made in October 2010 with the intention that the cover would kick in after six months, once the sick pay, provided by the IT business, expired. The employer did not wish to be named.
However, this claim was rejected in March 2011 by Canada Life based on the claimant’s occupation definition and evidence provided by his GP and hospital consultant.
Mr Kafton said the policy referred to the employee as project manager but as it was a group scheme, it did not reflect the individual responsibilities of the role.
According to documents, seen by Financial Adviser, the insurer refused repeated requests to meet the adviser, the business and the claimant in person.
The response from Canada Life to the client said: “It is the medical capability to perform the material and substantial duties of occupations, against which group risk income protection insurances are assessed.
“An occupation can be carried out for any employer with employees in the relevant position or, for some occupations, on a self-employed basis. The policy definition must be considered in generic terms and the company is not persuaded on the information and evidence provided.”
An appeals panel at Canada Life looked at the decision in May 2011 and upheld the rejection, but offered to make an ex-gratia payment of £3215.
This was accepted and meant a new policy had to be applied for, which required new medical evidence and applications from the employer.
The full application was sent last month, accompanied by a second opinion from another doctor, which said the employee was unfit to work.
The advisory firm also informed the insurer that the employee had resigned and was serving notice until the end of March. The letter said: “The resignation was a technicality and was down to his illness”.
This also meant the employee was no longer on risk.
Mr Kafton added: “This whole saga has shown that the policy is not worth the paper it is written on.
“Insurance companies are supposed to pay out on genuine cases. This guy has a serious illness - you cannot get much worse than a brain tumour.