Lawyer’s pitch for early $1.2m terminal illness insurance payout rejected

Without treatment Hugh Catherwood’s cancer would have killed him by now.

That was his point when he claimed for an early payout of terminal illness diagnosis cover on an insurance policy for which he’d been paying hundreds of dollars a year in premiums.

A recent High Court decision said Catherwood, a senior Christchurch lawyer, was feeling well in late 2018 when his wife’s death from breast cancer and another relative’s serious health problem prompted him to have medical tests.

To his surprise the tests found a tumour at the top of his stomach close to the oesophagus and diaphragm.

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By the end of the following month he was already having problems swallowing and he was told the cancer would kill him within a year if not treated, Justice Rachel Dunningham said in her judgment.

He had trauma recovery insurance and was paid $564,185.23 soon after he was diagnosed.

Chemotherapy, surgery and more chemo followed and as at late 2022 he seemed to be free of cancer. But longer term survival was less optimistic.

Treatment may have saved his life for now but Catherwood said an extended definition of “terminal illness” should have triggered an early payment of his $1.2 million life insurance from Asteron Life.

Asteron refused to pay and Catherwood sued them for breaching the contract. The judge decided in favour of Asteron.

Catherwood has filed an appeal. No date has been set for the hearing. He declined to comment on Wednesday.

In the High Court last year his lawyer had argued the definition of terminal illness and terminally ill in the policy, included where “life expectancy is, due to sickness and regardless of any available treatment, not greater than 12 months”.

That meant the assessment that life expectancy was less than 12 months should be made disregarding available medical treatment, he said.

Asteron said the words meant he was terminally ill if life expectancy was less than 12 months even with treatment, and then the policy would cover early payment of the death benefit.

The issue was whether the terminal illness benefit was objectively intended to cover someone who was not going to die, the company’s lawyer said.

The judge said she had to choose whether one of the meanings was, on an objective interpretation, more likely than the other.

She thought the only reasonable interpretation was that the definition of “terminal illness” and “terminally ill”, was intended to take account of available medical treatment.

The judge was told that the insurance company had now changed the words of the policy to read: “Your life expectancy is, due to sickness and even with available medical treatment, not greater than 12 months.”