Insurance Claims Denied Due to Undisclosed Medical History

A man, referred to as A, had been taking medication for gastritis and indigestion for a month. After enrolling in an insurance plan, he was diagnosed with stomach cancer a year later. Faced with the shocking diagnosis, he felt relieved to have insurance coverage. However, after filing a claim, he received devastating news: the insurance company denied his claim because he failed to disclose his prior treatment for gastritis. Despite consistently paying his premiums, he wondered if he could be denied benefits due to past medication.

Many individuals enroll in insurance to prepare for unexpected illnesses, but they often encounter unforeseen issues when filing claims. A common problem arises from failing to properly disclose past medical history or treatment, known as the duty of disclosure.

Should You Disclose Even Mild Medications?

Duty of disclosure requires insurance applicants to truthfully inform the insurer about past illnesses, surgeries, and medications as prompted in the application form. Insurers assess risk levels based on the applicant's age, occupation, and health status to determine premiums and coverage conditions. Consequently, application forms include questions about medical history and treatment. If an applicant intentionally or negligently fails to disclose significant information, the insurance contract may be voided, or benefits may be denied.

Before applying for insurance, it is advisable to remember the timeframes of '3 months, 1 year, and 5 years.' Typical insurance applications inquire about any diagnoses, suspected conditions, treatments, hospitalizations, or medications within the last three months. They also check for any additional tests or follow-ups from doctor visits or health screenings within the past year. For the last five years, they look for hospitalizations, surgeries, ongoing treatments lasting more than seven days, or medications taken for over 30 days, as well as diagnoses or treatments for major illnesses like cancer. However, the specific questions and disclosure requirements may vary by insurance product.

The issue is that seemingly trivial treatment histories can later hinder claims. Even medications prescribed for a mild cold must be disclosed if they pertain to application questions. The same applies if a health screening results in a suspected condition or a recommendation for further testing. Applicants should not assume that a minor ailment does not need to be reported.

Complaints regarding unpaid insurance claims are on the rise. According to the Financial Supervisory Service, complaints filed with life and non-life insurers in the first half of this year reached 9,827 and 30,136, respectively, marking increases of 47.0% and 40.5% compared to the same period last year. Among these, complaints related to the calculation and payment of benefits rose by 1,097 cases (77.2%) for life insurers and 3,415 cases (29.9%) for non-life insurers.

What Does 'Further Testing' Entail?

It is important to note that failing to disclose past medical history or treatment does not automatically result in denial of benefits. The relevance of the undisclosed information to the insurance claim must be evaluated. Disputes often arise between insurers and applicants over the interpretation of terms like 'suspected condition' or 'further testing' as stated in the application.

In one case, an applicant who underwent a bone marrow test due to a diagnosis of low platelet count was denied benefits for not disclosing a subsequent recommendation for a blood test. However, the Financial Supervisory Service's Financial Dispute Mediation Committee determined that the blood test was merely a follow-up to monitor platelet levels, not a detailed examination to identify a disease. Thus, they ruled that the applicant did not violate the duty of disclosure and ordered the insurer to pay the claim.

To avoid disputes over benefit payments, it is advisable for applicants to thoroughly review their medical history before enrolling. Checking past medical records on the National Health Insurance Service website and reviewing health screening results or prescriptions can help minimize omissions. However, not all medical treatments and prescriptions may be listed in the service's records, so individuals should also verify their own treatment history.

If there is uncertainty about whether something needs to be disclosed, it is safest to consult the insurance company directly. Simply explaining verbally to an agent may not suffice to fulfill the duty of disclosure, so it is crucial to accurately document everything on the application form. An industry representative stated, "If you are unsure whether something needs to be disclosed, do not make assumptions. Confirm with the insurance company and ensure it is documented on the application form."