The Australian Financial Complaints Authority (AFCA) has ruled a woman who was diagnosed with a malignant brain tumour months after cancelling her critical illness cover is entitled to make a claim.

AFCA ordered MLC to pay the woman $500,000. She lodged a complaint against the insurer after it declined her claim on grounds that its liability to pay critical illness benefits was by reference to the date of diagnosis.

MLC says a critical illness benefit only applies when an insured person is diagnosed while the policy is still in force.

The woman cancelled her policy in February 2018 due to the cost of the cover, and was diagnosed with the cancer six months later. Before she was diagnosed with the illness, she had sought medical help from doctors and specialists for various ailments such as tingling leg nerves.

In August 2018, it was confirmed she was suffering from a malignant brain tumour, and she submitted her claim in June 2019.

AFCA did not agree with MLC’s decisions for denying the claim, ruling the terms and intent of the policy did not specify that cover was linked to the timing of the diagnosis.

It says 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.

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

Click here for the ruling.