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Insurer wins dispute over mental health misrepresentation 

A complainant who was on anti-depressant medication but failed to provide the information when asked about her history of mental health in her life insurance application form has lost her dispute with the insurer. 

The dispute arose after she made a claim on her total and permanent disability (TPD) policy for major depression and MLC decided to vary the policy by putting an exclusion for mental illness, a measure that would defeat the claim. 

MLC said it was entitled to add the exclusion because the complainant had misrepresented her mental health history when she applied for the policy in March 2015. 

In the application form, one of the questions asked if she had ever had, been told she had, or ever sought advice from doctors or other health professionals about anxiety, stress, or sleeplessness, in a list of mental health conditions provided in the form. 

She gave a “No” reply and “that answer was wrong,” the Australian Financial Complaints Authority (AFCA) said in its determination. 

The complainant also gave the wrong answer to another question that asked if she had taken medications other than multivitamins in the last five years prior to her application for the TPD policy. 

She answered “No” despite having had a two-year history of depression and was taking medication up to three months before she applied for the policy. 

AFCA said she made misrepresentations when she told the insurer she had not suffered from mental illness and had not taken medication other than multivitamins. 

“Her answer of ‘no’ to the question about mental illness was a misrepresentation. Her answer to the question about medication was also a misrepresentation,” AFCA said. 

The complainant said she did not know she had been diagnosed with depression, did not know her medication was to treat depression and that she thought the medication was to improve her mood. 

But AFCA was not persuaded by her explanation. 

“Even if I accept that the complainant was never told she was suffering from depression, she did know she had seen her doctor about sleeplessness and mood problems,” the ombudsman said. 

“She admits she had treatment, including medication, for an ‘anxiety-related condition’, and to improve her mood.  

“That is enough for her answers to the questions about mental illness and medication to be wrong.” 

AFCA ruled MLC has shown that it would have put a mental illness exclusion on the policy if the complainant did not make the misrepresentations. It has also shown other insurers would have done the same. 

Click here for more from the ruling.