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Husband loses dispute over wife's death cover

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A man whose wife’s $97,200 death cover in her super fund was cancelled and replaced by a more restrictive policy has lost a dispute after a claim was denied.

The woman had default cover due to membership of a HESTA fund, but legislation starting in March 2019 meant the cover would cease, unless she responded to a notice saying she wanted it to continue.

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

The old cover ceased on July 1 2019, and the member then asked for new cover, which started on March 5 2020.

The member died on February 12 2021 and the complainant made a claim for the death benefit.

But the insurer, AIA, refused the claim because the new cover excluded pre-existing medical conditions, and it determined that she had died from such a condition.

The complainant argued that he should be paid the death benefit but the trustee declined to do so.

“It was never our intention to cancel the death benefit and in fact we were relying on the benefit as part of her final estate for the family,” the complainant wrote.

“My complaint is that [the trustee] failed to appropriately notify us that the death benefit would be cancelled.

“[We] had not been initially made aware that the death benefit had ceased. When we did become aware, via online account, that the death benefit had ceased, we contacted [the trustee] to have it reinstated immediately.”

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

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

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