Lawyer’s proposal for a $1.2 million early terminal illness insurance payout was denied

Louie Douvis/AP

Chemotherapy, surgery and more chemo beat the cancer, at least for a while, the court heard. (file photo)

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

That was his point when he requested early payment of insurance coverage for a terminal illness diagnosis on an insurance policy for which he had paid hundreds of dollars a year in premiums.

A recent High Court ruling says Catherwood, a senior Christchurch barrister, was feeling good in late 2018 when his wife’s death from breast cancer and another relative’s serious health condition prompted him to undergo medical tests.

To his surprise, tests found a tumor at the top of his stomach near the esophagus and diaphragm.

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By the end of the following month he was already having difficulty swallowing and was told the cancer would kill him within a year if left untreated, Judge Rachel Dunningham said in her ruling.

He had trauma recovery insurance and was paid $564,185.23 shortly after his diagnosis.

Chemotherapy, surgery and more chemo followed and by the end of 2022 he appeared cancer free. But longer-term survival was less optimistic.

The treatment may have saved his life for now, but Catherwood said an expanded definition of “terminal illness” should have triggered a $1.2 million early payment on his life insurance policy from Asteron Life.


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Asteron refused to pay and Catherwood sued her for breach of contract. The judge ruled in favor of Asteron.

Catherwood has appealed. No date was set for the hearing. He declined to comment on Wednesday.

Last year his solicitor in the High Court argued that the definition of terminal illness and terminally ill was included in the policy where “life expectancy due to illness and regardless of any available treatment is not more than 12 months”.

That meant the assessment that life expectancy was less than 12 months should be made without considering 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.

John Hawkins/stuff

Judge Rachel Dunningham said she chose the only reasonable interpretation, objectively speaking. (file photo)

The question is whether the terminal illness benefit was objectively intended to cover someone who would not die, the company’s attorney said.

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

She suggested that the only reasonable interpretation is that the definition of “terminal illness” and “terminally ill” should take into account available medical treatment.

The judge was told that the insurance company had now amended the wording of the policy to read: “Your life expectancy, due to illness and even with available medical treatment, is no more than 12 months.”

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