A woman who was diagnosed with a rare malignant brain tumour six months after she cancelled her insurance has been awarded a $500,000 payout in a claim dispute ruling.

In February 2018, the woman discontinued a critical illness policy she had held with MLC for two years. In August of that year she was diagnosed with the brain cancer after suffering a seizure following years of visits to doctors and specialists with symptoms such as tingling leg nerves.

MLC denied her claim, saying the critical illness benefit only applied when someone was diagnosed while the policy was in force. The insured event was the diagnosis, not the arising of the condition, it argued.

The Australian Financial Complaints Authority (AFCA) rejected that interpretation, saying MLC must pay $500,000 as the terms and intent of the policy did not specify that cover was linked to the timing of the diagnosis.

The wording of the policy only stipulated that the “insured suffers a critical condition while this insurance is in force”.

“The terms and the intent of the complainant’s cover was to pay a benefit for a malignant cancer that is suffered whilst the policy is in force and not when first diagnosed, as claimed by the insurer,” AFCA said.

The policy only stipulated the insured must suffer from the illness “without any reference to the need for a diagnosis,” AFCA said.

“It provides that payment is made after the condition is diagnosed. It does not require the first diagnosis to be during the policy period,” it said.

The woman had consulted a doctor in 2016 with complaints of unusual neurological symptoms and nerve sensations in her leg. She was referred for tests to a neurologist who said the symptoms were unlikely to be of serious concern and no further investigation was warranted.

In 2017 she sought medical help for fatigue, bloating and shortness of breath and in mid 2018 – a few months after she cancelled her insurance policy – had a seizure after experiencing pins and needles from her right foot to her hip. A brain scan revealed a lesion in her brain and she underwent surgery to remove it in July 2018, with a final diagnosis of a very rare malignant tumour given the following month.

The tumour was the most likely cause of the original symptoms in 2016, according to medical evidence, and the bloating and fatigue in 2017 when she was still a policyholder may have been due to the presence of cancer.

“There is evidence that the complainant’s tumour, a malignant cancer, was on the balance of probabilities present in February 2018,” a doctor report said, adding that it was “almost certain that a scan done in February 2018 would have demonstrated the tumour, although it was not symptomatic at that point”.

MLC rejected this “retrospective diagnosis” as speculation. Its liability was by reference to the date of diagnosis and not conditions that may arise during the course of cover but only diagnosed after cover ceased, the insurer said.

AFCA countered that MLC was only “inconvenienced” by the doctor not diagnosing the cancer prior to the policy cancellation date and ruled the woman was entitled to the benefit payable while the insurance was in force.

Click here to read the full ruling.