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Issue 33 - May 2018

Key determination


Insurance claim denied when temporarily overseas

The issue
Mr P fell ill while overseas in 2013 and was diagnosed with a chronic illness. He applied for and was granted income protection benefits through a group policy held by his company. 

The financial services provider (FSP) cut off the payments in 2015, saying that no further claim benefits were payable until Mr P returned to Australia. Mr P returned to Australia and the income protection benefit was reinstated. 

When he left Australia again, the benefit was cut off once more because the FSP said it was not payable unless Mr P was continuously resident in Australia or another approved country.

Key findings
We found the insurer cut off Mr P’s benefits on the basis of the Worldwide Cover clause, which had the effect that benefits were not payable beyond 12 months unless Mr P lived continuously in Australia or an approved country. The country Mr P had visited was not included on the list of approved countries.

We found that Mr P had been living in Australia, and had provided his Australian address on his claim form in February 2016. The insurer said that Mr P being in a country that was not on the approved list, even temporarily, could contribute to a loss in the level of healthcare received. However, Mr P provided evidence that showed he received regular, high quality care while overseas. 

The outcome
We found in favour of the applicant. Section 54 of the Insurance Contracts Act applied to prevent the FSP from cutting off Mr P’s payments on the basis that he stopped residing in Australia.

We were satisfied that Mr P not being in an approved country had not caused or contributed to the loss Mr P was claiming for. We also considered that Mr P had, at least at first, temporarily visited another country, and had not ceased to reside in Australia while he was there.

We determined that the FSP must pay Mr P the income protection benefits owed from the time it ceased paying them (subject to Mr P providing relevant claim forms and medical certificates that had not yet been submitted).

In addition, the FSP was required to pay interest for the claims Mr P had already submitted.

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