My sister died from cancer. I wanted insurance cover, in case it happened to me too

In 2016, Madeline* met with an adviser to discuss her insurance needs. She took out life insurance of $250,000 and trauma cover. The trauma policy would pay a lump sum of $100,000 if she was diagnosed with a trauma condition specified in the policy. In October 2024, Madeline was diagnosed with Stage 1 breast cancer. Her adviser lodged a claim under her trauma policy, but the insurer declined it.  Her policy only covered metastatic cancer, classed as Stage III or Stage IV. Madeline was shocked by the insurer’s decision. At the time she took out the policy, her sister was dying of breast cancer. As well as dealing with terminal cancer, her sister had been struggling to manage on very limited funds. Madeline specifically took out insurance cover in case the same thing happened to her. She was certain she had explained all this to the adviser, and asked for “full cover for cancer”. Madeline believed that the adviser had arranged this for her. Madeline complained that the adviser had misled her about the trauma cover provided under her policy. The adviser disagreed with Madeline’s claim that he had not provided her with suitable advice. Madeline complained to FSCL.

What were the parties’ views?

Madeline

Madeline claimed the adviser discussed a standalone trauma policy and an accelerated trauma policy with her in 2016. The standalone trauma cover provided a lump sum payment if she was diagnosed with a condition specified in the policy. The accelerated trauma cover worked in a similar way, but the $100,000 lump sum payment would be deducted from the sum insured in the $250,000 life insurance policy. Madeline remembered the adviser saying that both trauma policies offered the same cover, even though the accelerated trauma policy was much cheaper. She thought the lower premium was because the accelerated trauma policy was linked to the life insurance cover. She said she very clearly remembered the 2016 conversations because of her sister’s situation.

Adviser

Despite the passage of time since the discussions, the adviser recalled some of his dealings with Madeline. He remembered that she came to see him because her sister was dying of cancer, and that it was important to Madeline that she had cover for cancer. After conducting a full needs analysis for Madeline, the adviser recommended life, standalone trauma, and income cover. Madeline took out life and trauma cover. The insurance company would only offer trauma cover with a 75% loading on the premium (which means the premium was increased by 75% due to risk factors), or with an exclusion for breast cancer, because of Madeline’s family history of cancer. Madeline decided not to buy the standalone trauma cover due to the premium cost. As she still wanted cover for cancer, the adviser suggested a cheaper alternative called accelerated trauma cover. Although the cover had a 75% loading, it was cheaper than the standalone trauma policy. The adviser was sure he had explained to Madeline that it would be harder to claim under the accelerated trauma policy. Madeline opted for the accelerated trauma cover, with 75% loading, instead of the option that would exclude breast cancer.

What was FSCL’s view?

This was a difficult case given the passage of time since the 2016 insurance discussions. After reviewing the adviser’s file and the parties’ recollections, we were satisfied that both cancer coverage and the cost of premiums were important for Madeline. She insisted she wouldn’t settle for less than full cover, no matter the cost, and chose the cheaper accelerated trauma policy because the adviser said both policies offered the same coverage. However, the following year, Madeline told the adviser she considered cancelling the cover because it was “too costly”. She did not follow through, but it was clear that cost was an issue for her. We thought it likely that there were discussions about the differences in cover provided by the two trauma policies based on the severity of conditions. Given the significant price difference, it seemed unlikely that the adviser said the cover was identical. While Madeline believed the cheaper price was due to the accelerated trauma cover being linked to the life policy, she couldn’t confirm that the adviser told her this. We could not be satisfied that the adviser misled Madeline about the accelerated trauma policy cover. Overall, the adviser gave suitable advice that matched Madeline’s insurance needs — providing serious trauma cover at a more affordable price.

How did FSCL suggest that the complaint should be resolved?

We suggested Madeline discontinue her complaint, because we were not satisfied that the adviser had breached his obligations to her. At Madeline’s request, we reviewed our findings, but our conclusion remained the same, and we closed the case.

Insights for consumers

Financial advisers have stronger obligations to keep clear records of their recommendations to clients than they did in 2016, when the insurance discussions in this case took place. Consumers should check their policy documents when buying insurance to ensure they provide the level of cover they want. If a claim is declined years later, and you think you were given the wrong policy, it can be hard to prove what was discussed at that time.  Make sure your cover matches your needs from the start.

* Names have been changed. Our case studies are brief summaries of our more detailed case notes from our investigations. For more information on this case, contact .