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[h=2]Unethical practice by NTUC Income[/h]
September 5th, 2013 |
Author: Contributions
What this article is about -
This article takes a look at the wide and profound implication on the
insurance industry affected by simple unethical actions from NTUC Income. It
appears that insurance companies are able to avoid payouts to legitimate claims
simply by capitalising the loose interpretation of clauses and lack of knowledge
on the part of clients.
Background -
There is an ongoing case where a policyholder of NTUC Income is not paid in
spite of her being paralysed from waist down. The core issue appears to be what
constitutes “permanent incapacity”.
Forum letter from client to NTUC Income - Disabled
from waist down but insurance claim denied
I HAD an accident in February last year that left me disabled from the
waist down.
The doctor’s diagnosis was that I had suffered a spinal cord injury known
medically as cauda equina syndrome.
I cannot feel my legs. I lie in bed most of the time as sitting for long
periods puts immense pressure on my lower spine and causes a shooting pain in
the lower back.
I held a job in the banking industry for 12 years before the accident but
am unable to work now.
Two months ago, I contacted my insurer NTUC Income to make a claim on my
Dependants’ Protection Scheme policy. The coverage was up to $46,000, which is
not substantial but would be useful for an unemployed person.
The policy said there would be a
payout only upon death or permanent incapacity. But I was told that my
medical condition did not qualify me for that as I could still perform sedentary
work.
Income replies - NTUC
Income explains why policyholder’s claim was denied
MS WENDY Tan said she was unable to make a claim under her Dependants’
Protection Scheme policy following an accident that left her disabled from the
waist down (“Disabled from waist down but insurance claim denied”;
yesterday).
The Dependants’ Protection Scheme is an affordable national scheme
intended to provide basic insurance in the event of the policyholder’s death or
permanent incapacity, which is defined as being physically or mentally
incapacitated from ever continuing in any employment, including
self-employment.
Conversely, if a person is able to perform simple or sedentary forms of
work, she is not considered to be permanently incapacitated.
According to Ms Tan’s attending specialist, she is able to perform jobs
that allow her to sit.
Using loose interpretation of term that supposedly triggers a payout
to avoid payments -
It looks like NTUC Income is playing on the interpretation of the term
“permanent incapacity”. I believe that in the insurance industry, a more common
term used is “permanent disability”. I also believe that the industry practice
of determining what constitutes “permanent disability” is the permanent loss of
the use of two eyes, or permanent loss of the use of at least two limbs. Hence,
as far as industry practice is concerned, the claimant should be paid.
However, due to the ingenuity of NTUC Income, it has reworded “permanent
disability”, which has very objective interpretation, to a vague meaning loose
term called “permanent incapacity”. NTUC Income states that permanent incapacity
is the inability to do any work. But that is very loose and vague. This is
highly unethical and goes against the spirit of insurance – protection. Here are
my reasons:
1. DPS is supposed to compensate the loss in income earning ability
due to physical impairment - This is the very reason why the client
takes up the policy in the first place. To protect her ability to earn an
income. The fact is that the client now suffers a condition that disallows her
to perform jobs that a fully able bodied person can do. She has to perform a job
that is going to restrict her income. Furthermore, currently, there are not many
jobs that are wheelchair bound friendly. How many jobs are there that allow you
sit throughout your work? Even so, you need to move about to eat, visit the
toilet etc. How many companies have facilities meant for such disabled?
What NTUC Income has done is to convert the very objective description of
what constitutes “permanent disability”, into a very subjective meaning of what
constitutes “permanent incapacity”. By making its terms vague, NTUC Income is
able to avoid making claims it otherwise would have to pay.
So in the end, what is the purpose of the DPS, if it doesn’t protect even a
fraction of the loss of the earning ability of the policy holder?
2. DPS is an opt out scheme and NTUC never explained the details to
the customer in person - In the insurance industry, there is what is
supposedly called “in good faith”. This means that BOTH the client and the
company have to give all relevant details to each other. The client has to tell
the company his/her pre-existing illnesses. The company also has to tell the
client any “hidden and unseen factors” unknown to the client.
The opt-out scheme when it was first introduced has already broken this
golden rule of “in good faith”. Firstly, unwitting customers who did not opt out
are automatically in. But many of such customers don’t even know they have to
declare pre-existing illnesses. So when a claim is made, only then the company
tells the customers that they won’t be paid because of their non-declaration of
the pre-existing illness. But wait, isn’t it the duty of the company to make
sure that the customer knows he has to declare pre-existing illness? So why did
not the company send a rep to make it clear to the customer? The company has
equally failed in its duty of “in good faith”!
In the end, it is the customer who loses out. He pays so much in premiums and
he gets nothing in return. The company laughs all the way to the bank!
3. Client not told what “permanent incapacity” means - Let’s
get back to the NTUC Income case. It looks like the client who tries to make the
claim was not made known what constitutes “permanent incapacity”. Again, this is
the problem with the opt out scheme. No insurance rep was there to explain to
her when she was roped into the scheme. No signature from the client was
required. And the company assumed that all terms the company set will apply to
the client, whether she is aware of it or not. Again, this is against the
principle of “in good faith” because material info was withheld from the
client.
Far implication of Medishield Life and other opt out or forced
insurance schemes -
This incident is going to have a very heavy implication on the Medishield
Life and other opt out or forced insurance schemes. Opt out and forced insurance
schemes will work the same way. No acknowledgement is required from the client.
The insurance companies can simply assume all the clients know the terms and
conditions of the policies they issue. So hard luck for the customers even if
they don’t have a clue what the terms are.
Then one fine day, when a claim is made, the company can point out any term,
any condition or whatever and tell the client that there is no case for a
payout, just like the NTUC Income case. Unlike the usual practice where the
client is explained the terms and conditions by a rep of the company, there is
no one to explain the terms to these ready made clients under the opt out or
forced schemes.
This is yet another reason to object to the mad forced Medishield Life
scheme.
Wrapping up and conclusion -
NTUC Income has worded the payout for “permanent incapacity” loosely and has
used it to its advantage. This is starkly different from the more objective
definition which has been the norm in the insurance industry. The norm is to
make a payout upon “permanent disability”, which means the loss of the use of
both eyes or the loss of use of at least two limbs. By NTUC Income’s definition,
the DPS only pays out upon death, total paralysis or when one deteriorates into
a vegetative state.
The issue of ethics come into play. Since the DPS is an opt out scheme, there
would certainly be many policy holders who do not know that they or their kin
may not be receiving any payouts, mainly due to non-declaration of pre-existing
illnesses and/or their ignorance on the terms of payout.
As it is today, the image of the insurance industry has already been riddled
with incidents that put them in bad light. This latest incident is not helping
NTUC Income’s image or the industry’s image one
bit.
Barrie
*
The writer blogs at http://wherebearsroamfree.blogspot.com.
This article takes a look at the wide and profound implication on the
insurance industry affected by simple unethical actions from NTUC Income. It
appears that insurance companies are able to avoid payouts to legitimate claims
simply by capitalising the loose interpretation of clauses and lack of knowledge
on the part of clients.
Background -
There is an ongoing case where a policyholder of NTUC Income is not paid in
spite of her being paralysed from waist down. The core issue appears to be what
constitutes “permanent incapacity”.
Forum letter from client to NTUC Income - Disabled
from waist down but insurance claim denied
I HAD an accident in February last year that left me disabled from the
waist down.
The doctor’s diagnosis was that I had suffered a spinal cord injury known
medically as cauda equina syndrome.
I cannot feel my legs. I lie in bed most of the time as sitting for long
periods puts immense pressure on my lower spine and causes a shooting pain in
the lower back.
I held a job in the banking industry for 12 years before the accident but
am unable to work now.
Two months ago, I contacted my insurer NTUC Income to make a claim on my
Dependants’ Protection Scheme policy. The coverage was up to $46,000, which is
not substantial but would be useful for an unemployed person.
The policy said there would be a
payout only upon death or permanent incapacity. But I was told that my
medical condition did not qualify me for that as I could still perform sedentary
work.
Income explains why policyholder’s claim was denied
MS WENDY Tan said she was unable to make a claim under her Dependants’
Protection Scheme policy following an accident that left her disabled from the
waist down (“Disabled from waist down but insurance claim denied”;
yesterday).
The Dependants’ Protection Scheme is an affordable national scheme
intended to provide basic insurance in the event of the policyholder’s death or
permanent incapacity, which is defined as being physically or mentally
incapacitated from ever continuing in any employment, including
self-employment.
Conversely, if a person is able to perform simple or sedentary forms of
work, she is not considered to be permanently incapacitated.
According to Ms Tan’s attending specialist, she is able to perform jobs
that allow her to sit.
to avoid payments -
It looks like NTUC Income is playing on the interpretation of the term
“permanent incapacity”. I believe that in the insurance industry, a more common
term used is “permanent disability”. I also believe that the industry practice
of determining what constitutes “permanent disability” is the permanent loss of
the use of two eyes, or permanent loss of the use of at least two limbs. Hence,
as far as industry practice is concerned, the claimant should be paid.
However, due to the ingenuity of NTUC Income, it has reworded “permanent
disability”, which has very objective interpretation, to a vague meaning loose
term called “permanent incapacity”. NTUC Income states that permanent incapacity
is the inability to do any work. But that is very loose and vague. This is
highly unethical and goes against the spirit of insurance – protection. Here are
my reasons:
1. DPS is supposed to compensate the loss in income earning ability
due to physical impairment - This is the very reason why the client
takes up the policy in the first place. To protect her ability to earn an
income. The fact is that the client now suffers a condition that disallows her
to perform jobs that a fully able bodied person can do. She has to perform a job
that is going to restrict her income. Furthermore, currently, there are not many
jobs that are wheelchair bound friendly. How many jobs are there that allow you
sit throughout your work? Even so, you need to move about to eat, visit the
toilet etc. How many companies have facilities meant for such disabled?
What NTUC Income has done is to convert the very objective description of
what constitutes “permanent disability”, into a very subjective meaning of what
constitutes “permanent incapacity”. By making its terms vague, NTUC Income is
able to avoid making claims it otherwise would have to pay.
So in the end, what is the purpose of the DPS, if it doesn’t protect even a
fraction of the loss of the earning ability of the policy holder?
2. DPS is an opt out scheme and NTUC never explained the details to
the customer in person - In the insurance industry, there is what is
supposedly called “in good faith”. This means that BOTH the client and the
company have to give all relevant details to each other. The client has to tell
the company his/her pre-existing illnesses. The company also has to tell the
client any “hidden and unseen factors” unknown to the client.
The opt-out scheme when it was first introduced has already broken this
golden rule of “in good faith”. Firstly, unwitting customers who did not opt out
are automatically in. But many of such customers don’t even know they have to
declare pre-existing illnesses. So when a claim is made, only then the company
tells the customers that they won’t be paid because of their non-declaration of
the pre-existing illness. But wait, isn’t it the duty of the company to make
sure that the customer knows he has to declare pre-existing illness? So why did
not the company send a rep to make it clear to the customer? The company has
equally failed in its duty of “in good faith”!
In the end, it is the customer who loses out. He pays so much in premiums and
he gets nothing in return. The company laughs all the way to the bank!
3. Client not told what “permanent incapacity” means - Let’s
get back to the NTUC Income case. It looks like the client who tries to make the
claim was not made known what constitutes “permanent incapacity”. Again, this is
the problem with the opt out scheme. No insurance rep was there to explain to
her when she was roped into the scheme. No signature from the client was
required. And the company assumed that all terms the company set will apply to
the client, whether she is aware of it or not. Again, this is against the
principle of “in good faith” because material info was withheld from the
client.
Far implication of Medishield Life and other opt out or forced
insurance schemes -
This incident is going to have a very heavy implication on the Medishield
Life and other opt out or forced insurance schemes. Opt out and forced insurance
schemes will work the same way. No acknowledgement is required from the client.
The insurance companies can simply assume all the clients know the terms and
conditions of the policies they issue. So hard luck for the customers even if
they don’t have a clue what the terms are.
Then one fine day, when a claim is made, the company can point out any term,
any condition or whatever and tell the client that there is no case for a
payout, just like the NTUC Income case. Unlike the usual practice where the
client is explained the terms and conditions by a rep of the company, there is
no one to explain the terms to these ready made clients under the opt out or
forced schemes.
This is yet another reason to object to the mad forced Medishield Life
scheme.
Wrapping up and conclusion -
NTUC Income has worded the payout for “permanent incapacity” loosely and has
used it to its advantage. This is starkly different from the more objective
definition which has been the norm in the insurance industry. The norm is to
make a payout upon “permanent disability”, which means the loss of the use of
both eyes or the loss of use of at least two limbs. By NTUC Income’s definition,
the DPS only pays out upon death, total paralysis or when one deteriorates into
a vegetative state.
The issue of ethics come into play. Since the DPS is an opt out scheme, there
would certainly be many policy holders who do not know that they or their kin
may not be receiving any payouts, mainly due to non-declaration of pre-existing
illnesses and/or their ignorance on the terms of payout.
As it is today, the image of the insurance industry has already been riddled
with incidents that put them in bad light. This latest incident is not helping
NTUC Income’s image or the industry’s image one
bit.
Barrie
*
The writer blogs at http://wherebearsroamfree.blogspot.com.
