【Diversification】Bought Two Critical Illness Policies but Only One Paid Out? Unpacking the "Real Reason" Behind Benign Brain Tumor Claim Rejections

This "failed claim" case not only exposes the long-standing chaos of policy terms in Hong Kong's critical illness insurance market but also brings up a crucial question: If you buy two critical illness policies, are you guaranteed to get paid twice? The answer is clearly no. When facing unpredictable severe illnesses, your insurance portfolio must never overly rely on the claim terms of a single company.

Quick Answer: Why are critical illness claims rejected? Why was the benign brain tumor claim denied?
In the past, Hong Kong lacked a unified definition for critical illnesses. When drafting contracts, each insurance company had vastly different wording requirements for the severity of the same disease, the type of surgery required, or the duration of aftereffects. As long as the patient's pathology report failed to fully meet that specific company's strict medical definition, the claims department retained the absolute right to refuse compensation citing "failure to meet claim terms", regardless of how severe the condition was.

Claim Analysis: Why reject a benign tumor? Recognizing the "Permanent Neurological Deficit" clause

In the news case mentioned above, why did the same illness result in different claim outcomes? This is usually because older policy terms hide an extremely harsh legal threshold: "Permanent Neurological Deficit".

Some insurers stipulate that a medical scan confirming a benign brain tumor is insufficient; the patient must prove the tumor caused permanent neurological damage lasting several months or more (such as paralysis or blindness), or they must have undergone a highly risky traditional open-skull surgery to be eligible for payout. If the patient did not have surgery and was not disabled (e.g., opting for advanced Gamma Knife radiosurgery), older policies are highly likely to legally deny the claim. This is exactly the severe term loophole that the new standardized policies aim to fix.

An Industry Milestone: Critical Illness Definition Standardization Takes Effect Sept 1, But What About Existing Clients?

To resolve these long-standing claim disputes, the Hong Kong Federation of Insurers (HKFI) finally took action, issuing a code of practice to implement the "Standardization of Critical Illness Definitions". For new critical illness products launched from September 1st this year, the medical definitions and names of 21 common critical illnesses (including 16 major illnesses and 5 early-stage illnesses, accounting for up to 90% of all claims) will be unified. The aforementioned "benign brain tumor" is included and will adopt a more lenient and unified claim standard. This is undoubtedly a commendable policy that reduces disputes over term interpretation.

The Blind Spot: Standardization Has No Retroactive Effect
However, a harsh reality hides behind this good news—this code of practice only applies to brand-new insurance products launched after September 1st. This means that for the millions of citizens in Hong Kong currently holding existing critical illness policies, the terms on their contracts will not automatically update. Old policies remain bound by the specific term differences and exclusions signed at the time.

Strategic Defense: Does diversifying insurance purchases improve claim success rates?

Why does the same illness yield different claim outcomes across companies? Since we cannot change the terms of old policies, how should we, as savvy consumers, protect ourselves? The answer is: strategically diversify the risk.

Just as investors shouldn't put all their capital into a single stock, insurance planning shouldn't place the entire budget into a single product from a single company. The onset of an illness is unpredictable, and we never know whether a future pathology report will meet Company A's terms or Company B's terms.

By purchasing critical illness insurance from different companies with varying coverage amounts, you can effectively build a "complementary defense line". Just like the benign brain tumor case above, precisely because the father bought multiple different policies, at least one successfully paid out, providing crucial emergency cash for the family. Had he put his entire budget into the company that rejected the claim, the consequences would have been unthinkable.

At a Glance: Existing Policies vs. New Standardized Policies

Anti-Scam Warning: Don't Fall into the "Twisting Trap" of Unethical Intermediaries

As news of critical illness standardization spreads, the market may see a surge of unethical financial consultants. They might use this as an excuse to persuade you: "Old policy terms are outdated and hard to claim. You should surrender it and transfer your funds to buy my brand-new standardized policy!"

If you hear this, please think twice. This is an extremely dangerous twisting trap.

Regulatory Requirements: The "Customer Protection Declaration" Must Be Signed Before Twisting
If a financial consultant strongly urges you to cancel an old critical illness policy to buy a new one, stay alert. Under the strict guidelines of the Hong Kong Insurance Authority, if you cancel an old policy within 12 months before or after buying a new policy, the transaction is legally defined as "twisting". The agent must complete a Customer Protection Declaration (CPD) with you, detailing the actual financial losses and term differences brought about by the switch (such as the risks of recalculated waiting periods, suicide clauses, and re-underwriting). If an agent conceals this document or attempts to mislead you, it constitutes a severe regulatory violation.

Furthermore, as you age, you inevitably accumulate more medical records. If you hastily cancel an old policy to apply for a new one, you can easily violate the strict "Utmost Good Faith" principle by omitting medical history on your new health declaration form, leading to a complete rejection during underwriting or a future claim. Your old policy locked in your insurability when you were young and healthy—an intangible asset no new terms can replace.

Panoramic Management: Master a Comprehensive Wealth Protection Net with Tech

Facing old policies with varying terms and upcoming new standardized products, how much critical illness insurance should you buy? How should you properly manage it? Having a clear view of your policies has never been more important.

Through InsurVault, a digital policy management tool tailored for Hong Kong families, you can centrally manage your critical illness policies from different insurance companies in 360 degrees. The system lets you compare coverage scopes and limits at a glance, ensuring that when practicing your "diversified risk" strategy, you won't get confused by having too many policies, making it easy to grasp claim conditions.

In the future, there are calls within the industry to emulate the Voluntary Health Insurance Scheme (VHIS) by launching a "Voluntary Critical Illness Insurance Scheme" (VCIIS), combining standardized terms with tax deductions to relieve pressure on public healthcare. In the face of a rapidly changing medical system, download InsurVault for free today to build a solid and comprehensive wealth protection net for your health, making it your strongest defense against unethical upselling.

Hong Kong FAQs (Critical Illness Claims & Term Differences)

Can I buy multiple critical illness policies? Will they pay out multiple times?
Critical illness insurance is a "lump-sum benefit", unlike reimbursement-based medical insurance. You can purchase multiple critical illness policies from different insurers. (Please note: During application, you must truthfully declare the total sum insured held with other companies. Insurers will conduct "Financial Underwriting" to ensure the total coverage aligns with your current reasonable income level to prevent moral hazard.) As long as you are successfully insured and the diagnosed illness meets the claim terms of each policy, all policies will independently pay out the full cash amount. Diversifying purchases not only increases the total compensation but also fills coverage gaps caused by the stricter terms of a single company.

Are benign brain tumors covered? Will all critical illness policies pay out?
Not necessarily. Before the standardization of critical illness definitions takes effect on September 1, the claim conditions for benign brain tumors vary by insurer. Some companies require the tumor to cause a specific and permanent neurological deficit or require open-skull surgery to be compensable. If a patient's pathology report fails to meet that company's specific medical definition, they face the risk of a rejected claim.

Since old policy terms differ, should I cancel my old policy and buy a new one?
Please reconsider carefully. Haphazardly canceling an old policy (twisting) exposes you to massive underwriting risks. As you age, your current health status may not be as ideal as when you first applied, and the new policy might impose exclusions based on your medical history. The best approach is to keep the old policy. If you spot a coverage gap, consider purchasing an additional new policy within an affordable range to achieve risk diversification.

Disclaimer: The information and case analyses in this article are for reference only and do not constitute any form of insurance, legal, medical, or financial advice. InsurVault is not a licensed insurance intermediary or dispute resolution body; it does not participate in policy sales, claim approvals, or provide medical treatment consultations. For the final terms and effective dates of the standardization of critical illness definitions, please refer to the official guidelines issued by the Hong Kong Federation of Insurers (HKFI). Before applying or claiming, please carefully read the policy details and refer to the official documents issued by your insurance company. For inquiries, please email contactus@insurvault.com.hk.