Husband loses wife’s death cover dispute

A man whose wife’s $97,200 death cover in his super fund was canceled and replaced with a more restrictive policy has lost litigation after a claim was denied.

The woman had cover by default due to her membership in a HESTA fund, but legislation from March 2019 meant cover would cease unless she responded to a notice that she wanted to continue .

The trustee says he complied with the law by emailing the notice, but the complainant said it was not received.

The old coverage ended on July 1, 2019, and the member then applied for new coverage, which began on March 5, 2020.

The Member died on February 12, 2021 and the Complainant applied for a death benefit.

But the insurer, AIA, denied the claim because the new coverage excluded pre-existing medical conditions, and it determined that she died of such a condition.

The plaintiff argued that he should receive the death benefit, but the trustee refused to do so.

“It was never our intention to rescind the death benefit and in fact, we were counting on the benefit as part of his final estate for the family,” the plaintiff wrote.

“My complaint is that [the trustee] failed to give us proper notice that the death benefit would be cancelled.

“[We] was not initially informed that the death benefit had ceased. When we learned, via an online account, that the death benefit had ceased, we contacted [the trustee] to restore it immediately.

He also said the trustee did not explain that the new coverage would exclude pre-existing conditions.

However, the Australian Financial Complaints Authority (AFCA) said it was satisfied that the notice was emailed to the correct email address and that the new cover was explained in the PDS. The decision to deny the request was fair and reasonable, he said.

Click here for the full decision.

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