Upheld: unfair claim refusal - critical illness insurance (TPD benefit) complaint against Canada Life Limited
Financial Ombudsman decision DRN-6296799 of 2026-05-05T00:00:00+00:00. unfair claim refusal - critical illness insurance (TPD benefit) complaint against Canada Life Limited. Outcome: Upheld.
Decision detail
| Reference | DRN-6296799 |
|---|---|
| Decision date | 2026-05-05T00:00:00+00:00 |
| Firm | Canada Life Limited |
| Product | insurance - group critical illness policy |
| Claim type | unfair claim refusal - critical illness insurance (TPD benefit) |
| Outcome | Upheld |
| Remedy | 1) Canada Life must review Dr O and Dr S medical reports and provide written outcome within 28 days of accepting this decision. 2) If evidence meets TPD policy wording, Canada Life must pay backdated claim with interest within 14 days. 3) If claim rejected, Canada Life must pay for independent assessment by external medical expert (not CMO or internal assessors). 4) Canada Life must provide Miss C choice of three medical experts within 14 days of rejection to review all evidence including Dr O and Dr S reports, assessing whether Miss C met policy definition as at April 2023. 5) Canada Life must provide written claim outcome within 28 days of receiving expert report, and pay backdated claim with interest if accepted. 6) If Canada Life pays claim and must deduct income tax from interest per HMRC requirements, it must confirm deduction and provide certificate to Miss C for potential tax reclaim. 7) Miss C retains right to make further complaint if appropriate. |
Summary
Miss C claimed total permanent disability (TPD) benefit under her employer's group critical illness policy after being signed off work in October 2020 with complex PTSD and anxiety disorders resulting from traumatic work incidents. Canada Life rejected her May 2023 claim in April 2024, stating the medical evidence did not demonstrate her condition would last throughout life with no prospect of improvement. Miss C appealed with additional medical evidence from multiple specialists, but Canada Life refused the appeal in September 2024. During the FOS review, Miss C obtained a new independent report from Dr O (Consultant Forensic Psychiatrist) in March 2026 concluding she met the policy criteria, and Canada Life obtained its own independent report from Dr S. The ombudsman upheld the complaint, finding that while Canada Life acted fairly initially, it must now fairly review the new independent medical evidence from Dr O and Dr S, and either accept the claim or fund an independent external medical expert assessment to determine whether Miss C met the policy definition as at the April 2023 termination date.
The Ombudsman's reasoning
The ombudsman found that while Canada Life acted fairly on the information before it when initially rejecting the claim, the situation changed when Miss C obtained additional medical evidence during the FOS review process. Dr L's July 2025 addendum report provided a retrospective assessment confirming the permanency of Miss C's condition, and Ms J provided detailed explanation of appropriate trauma-based therapy under NICE guidelines. However, there remained an evidentiary gap regarding whether Miss C's condition prevented her from performing the material and substantial duties of her own occupation ever again as at April 2023. The ombudsman determined that Canada Life must now review the new independent medical evidence from Dr O (and its own Dr S report) and either accept the claim if the evidence meets the policy wording, or fund an independent external medical assessment if it continues to refuse. The ombudsman rejected Miss C's request for compensation for distress, finding Canada Life had not acted unreasonably in its handling of the claim.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Canada Life Limited, all decisions | 195 | 20% |
Source
Read the original decision on the Financial Ombudsman Service website