Exclusions & restrictions to avoid

Uncertain Qualifying Days

An open ended definition can cause concern about whether or not a claim will actually be paid.  Example: Parkinson’s Disease

• Good definition: “by two or more of the following: muscle rigidity, tremor or bradykinesis”
• Poor definition:”by two or more of the following: muscle rigidity, tremor or bradykinesis and the Insured person requires substantial physical assistance from another adult to perform two or more activities of bathing, dressing, toileting, transferring and eating”

Being unable to perform 2 of 5 ADLs usually occurs when the victim is near death or at least must be institutionalized for around the clock care.  By adding the loss of 2 of 5 ADLs the definition has created an uncertain and usually very lengthy time frame before the Insured can qualify for a benefit.  The time period from initial diagnosis to when the Insured is able to satisfy the definition could be years or they could die before any claim is paid.

Omission Of Part Of Condition

A definition’s wording can result in a benefit not being paid when it was assumed it should have been. Example: Cancer (Life threatening)

• Good definition: “Means a malignant tumor characterized by the uncontrolled growth and spread of malignant cells and the invasion of tissue.  This includes Leukemia, Hodgkin’s Disease and invasive melanoma”
• Poor definition: “a definite diagnosis of a tumor characterized by the uncontrolled growth and spread of malignant cells and the invasion of tissue.  The diagnosis of Cancer must be made by a Specialist.”

 The poor definition does not cover Hodgkin’s Disease or Leukemia as neither is a tumor.

Extreme Severity Of Condition

A covered condition can occur but not be severe enough to satisfy the policy’s definition for a claim. Example: Stroke (cerebrovascular accident)

• Good definition: “ there must be evidence of permanent neurological deficit persisting for 30 consecutive days”
• Poor definition: “evidence of measurable, objective neurological deficit that has persisted for at least 30 consecutive days and is considered permanent”

The poor definition restricts claim payments to severe cases where the Insured suffers paralysis or cognitive impairment (measurable, objective neurological deficit).  The good definition requires evidence of scar tissue (permanent neurological deficit) to prove it wasn’t simply a migraine.  No

Unreasonable Moratorium Period

Several covered conditions have a 90 day moratorium period, which means that if that specific covered condition(s) was diagnosed within 90 days of the plan’s effective date then no benefit would be paid. Example:  Benign Brain Tumor.

•  Good definition: “The definitive diagnosis must be confirmed in writing by a Physician certified as a neurologist.”
•  Poor definition: “No benefit will be payable if the earlier of (a) the date of diagnosis or (b) the date of signs and/or symptoms and/or medical consultations or tests that led to the diagnosis of a benign brain tumor, is within 90 days following the issue date”

The good definition pays upon satisfactory proof of the diagnosis of a Benign Brain Tumor, even if it occurred within the first 90 days from the plan’s effective date.

Underwriting At Claim Time

Certain restrictions in a definition’s wording can permit the Insurance Company to retroactively renege or literally underwrite the covered condition at time of claim. Example:  Cancer (Tumor in presence of HIV).

•  Good definition: “The following cancers are excluded from coverage:
  •  Carcinoma in situ;
  • Stage 1A malignant melanoma (melanoma less than or equal to 1.0 mm in thickness, not ulcerated and without level IV or V invasion);
  • Stage A (T1a or T1b) prostate cancer,
  • Any non-melanoma skin cancer that has not become metastatic (spread to distant organs)”
•  Poor Definition: “The following forms of cancer are excluded:
  • Cancer in situ; and
  • Any skin cancer, other than malignant melanoma into the dermis or deeper;
  • Early prostate cancer (stage A or equivalent staging);
  • Any tumor in the presence of any human immunodeficiency virus (HIV).”

Individual Critical Illness Insurance policies are underwritten so the Insured should not have to undergo additional underwriting at claim time and have a claim denied if, for whatever reason, they contracted HIV infection at some future date.

Not Legally Sound

A definition that is not legally and medically sound can cause dilemmas at claim time. Example: Major Organ Transplantation.

Good definition:  “The actual undergoing as a recipient of a transplant of a heart, lung, liver, entire pancreas, kidney or bone marrow.’

Poor definition: “ irreversible failure of the heart, both lungs, liver, both kidneys or bone marrow, and transplantation must be medically necessary.”

We know an individual can function with a single kidney or lung.  If an Insured lost a kidney due to an injury or possibly donated it to a sibling and later suffered renal failure of the remaining kidney he/she wouldn’t be covered under the definition that states “both kidneys”.

Subjective Claim Assessment

In addition to paying close attention to the definitions’ wording you must also review the policy’s general exclusions and restriction to discover any potential problems at claim time. Example:  Sports Exclusion.

• Good policy:  Doesn’t list this exclusion.
• Poor policy:  “You are engaged in any hazardous sport including but not limited to sky or scuba diving; ballooning; hang gliding; bungee cord jumping; racing in any form (other than on foot) and all professional sports.  This does not include normal vacation sports such as skiing or snorkeling.  We will deny claims when we determine that undue risk or negligence was a factor.  Other sports will also be excluded where they involve a higher risk due to inexperience, lack of care or adequate knowledge of conditions.”

 The poor policy’s exclusion is extremely subjective and very open-ended and should not be included in a policy.