The fine print in insurance policy nobody reads until it matters

SINGAPORE – Insurance is meant to be a safety net. Many assume that once premiums are paid, medical and accident bills will be taken care of – but reality can be messier.

Recent cases in which policyholders’ claims were denied serve as a stark reminder that insurance is not a promise to pay every claim. It is a promise to pay claims that fall within the policy’s terms.

This technicality can leave policyholders facing tens or hundreds of thousands of dollars in unexpected out-of-pocket costs.

This distinction was thrown into sharp relief when a Singapore court delivered a rebuke to NTUC Income – now Income Insurance – over its handling of claims related to Ko Wah, an elderly victim of an accident.

Ko, who was 78 when he was knocked down by a van, suffered severe brain injuries requiring multiple operations, and became bedridden and permanently mentally incapacitated. He died five years later in October 2024.

The court awarded more than $417,000 in damages to his son, who had sued on behalf of Ko’s estate for damages for pain and suffering, loss of amenities arising from injuries in the accident, loss of pre-trial earnings, medical expenses and further expenses.

In issuing the judgment, deputy registrar Kim Bum Soo chided NTUC Income for its “wholly unreasonable behaviour”, citing “unfounded objections” to some claims and “casually impersonal stonewalling”.

Kim said: “Their position was that the late Mr Ko had been comatose the entire time and could not have appreciated any pain and suffering at all.”

He also noted that despite being given “an explicit opportunity” to explain their insistence “on such an unyielding and apparently unreasonable position”, NTUC Income “simply declined to explain themselves”.

Often, insurance disputes involve how policy terms are interpreted. This happens when you and your insurance company disagree about whether your policy covers a specific claim or situation. The company says it will not pay for it, even though you believe it should.

Most people think you are “safe” once you have insurance, but do you understand what your policy actually covers?

Although insurance policies are set out in black and white, their fine print and significant grey areas warrant scrutiny. Understanding the terms of coverage is crucial.

Samuel Wang, head of bancassurance at OCBC Bank, says most health insurance policies exclude pre-existing conditions such as heart disease, stroke and high blood pressure.

They may impose waiting periods before coverage kicks in, and incorporate cost-sharing features such as deductibles and co-insurance, which require out-of-pocket payments.

Hence, Wang says, the importance of paying close attention to the fine print cannot be overstated, no matter how tedious one may find the process.

Christopher Chong, co-head of law firm Dentons Rodyk’s professional liability/healthcare and insurance practices, says disputes in health insurance coverage almost always relate to the extent of cover.

These disputes can arise in several ways. Policyholders may find themselves at odds with insurers over whether a particular illness or disease affecting a specific part of the body is covered by the plan.

There may also be uncertainty whether an illness falls under exclusions such as pre-existing or congenital conditions.

Questions may emerge around treatment types and costs. For instance, while conventional cancer treatments such as chemotherapy, radiotherapy and surgery are typically covered, more specialised and costly options like immunotherapy may not be included under standard policies.

Chong says there may also be issues relating to the cost of treatment overseas, where medical expertise may be higher. For example, it has been observed that doctors in Japan and South Korea are more experienced in treating certain cancers, such as stomach, spleen and pancreatic cancers, than those in Singapore, owing to a higher incidence of such cases in those countries.

Legal contract not a promise to pay every claim

With death, accidents and illness often taboo subjects, some people buy insurance emotionally. They tend to think in broad terms: cancer, stroke, heart attack or disability.

Insurers, on the other hand, think in narrower definitions: exclusions and actuarial probabilities.

This mismatch is where disputes emerge.

Critical illness policies are not written simply around diagnoses. Many are tied to highly specific medical definitions, thresholds and procedural criteria. In some cases, claims depend not only on whether a person had a disease, but also on the severity of the disease; the extent of permanent impairment; the exact medical procedure used; how long symptoms persist; or whether the condition falls within tightly drafted definitions.

To actuaries, this precision is necessary. Insurance pricing depends on defining risk narrowly enough to remain commercially viable.

To policyholders, however, the expectation is simpler: “If I suffer a serious illness and survive emergency surgery, surely I am covered.”

Rapid tech advancement complicates coverage

A 45-year-old woman’s ongoing lawsuit against Prudential Assurance Singapore has struck a nerve because it exposes a fear many policyholders quietly harbour – that they may discover the true meaning of their insurance coverage only at a time when it matters most.

Cai Yunhong suffered a ruptured brain aneurysm in 2023 and underwent emergency endovascular repair, which is not covered under an early critical illness policy she purchased.

The minimally invasive procedure saved her life, but her claim for over $100,000 was denied.

Cai alleged that Prudential denied her claim in September 2023 because of a “single, buried clause” that defined brain aneurysm surgery as a surgical craniotomy – a procedure where part of the skull is removed to reach the brain.

Prudential’s position is that the contract clearly stated that the type of surgery Cai underwent was not covered.

The case now sits at the uncomfortable intersection of law, medicine, technology and consumer expectations.

Across medicine, technological advances are rapidly replacing older, more invasive treatments: robotic surgery instead of open surgery; catheter-based heart procedures instead of chest-opening operations; targeted cancer therapies instead of traditional chemotherapy; AI-assisted diagnostics; gene therapies; minimally invasive spinal procedures; and outpatient operations replacing inpatient stays.

Insurance contracts, however, are often written years earlier using medical frameworks prevailing at the time. This creates a structural lag.

An insurer may not necessarily be acting unfairly if it adheres strictly to policy wording. But a consumer may still reasonably feel blindsided when newer, safer treatments fall outside older definitions.

That gap will likely widen as medical innovation accelerates.

Artificial intelligence is already reshaping diagnostics. Precision medicine is personalising treatment pathways. Procedures once considered experimental become standard-of-care within years.

Yet, many insurance policies are static documents drafted for decades-long durations. A policy bought at age 30 may still rely on medical definitions designed in an earlier era by the time the customer is 60.

Why this matters

Knowing what you buy is an important aspect of financial planning, as shocks can affect a household’s financial resilience.

Singaporeans increasingly rely on private insurance to supplement national healthcare schemes. Critical illness plans are marketed as protection against income disruption, rehabilitation costs and long-term financial stress.

But many buyers do not realise how technical the definitions can be. This creates several financial risks.

First, there is the illusion of comprehensive coverage. Consumers often assume that a more expensive policy offers broader protection. In reality, a policy can have high payouts but still rely on narrow medical definitions, meaning fewer situations qualify for claims.

Second, medical progress can outpace policy language. Advances in treatment may reduce the severity of illness or hasten the recovery speed. While this is positive for patients, it can make it harder to meet policy thresholds that require severe or permanent impairment.

Third, most consumers do not read policy definitions in detail. Insurance documents can be voluminous and contain complex medical and legal terms. Even financially literate buyers may struggle to interpret definitions of neurological conditions, disease stages, surgical procedures or exclusions. As a result, many rely on summaries, insurance agents or assumptions rather than the actual fine print.

What buyers should look out for

Many disputes today stem less from legal issues than from gaps in expectations. Consumers may accept exclusions if they are clearly explained upfront. Problems arise when these are buried in technical language, surfacing only during a claim.

Against this backdrop, buyers should focus less on brand and more on terms and definitions. A well-known insurer does not guarantee broader coverage. Policies that appear similar can define illnesses, treatments and payout triggers very differently. The fine print often matters more than marketing materials.

It is important to ask about treatment-based exclusions. Coverage may depend on not just the illness, but also how it is treated. Newer approaches such as minimally invasive or robotic procedures may not always be included, even if they are widely used.

Regular reviews are equally important. Many policies are bought early in life and left unchanged for decades, even as medical standards evolve. Older plans may contain outdated definitions or exclude newer treatments, making them less relevant over time.

Buyers should not rely solely on verbal explanations from agents. Key details, especially for major conditions like cancer or stroke, should be confirmed in writing, including definitions, exclusions and claim criteria.

Consumers should understand that early critical illness plans often have stricter definitions because they pay out at earlier stages of illness.

Insurance works best as part of a broader financial strategy that includes savings and other protection, rather than as a standalone safety net.

The bigger trust issue

Ultimately, these cases resonate because insurance is not merely a financial product. It is a promise sold during one’s healthy years and tested during vulnerable ones.

Such cases can erode trust if consumers feel technicalities outweigh claim realities.

For consumers, the lesson is sobering. Do not buy insurance assuming you understand it. Buy it assuming you do not, and ask hard questions until you do.

When coverage disputes arise, remember that you have rights as a policyholder, and resources are available to help you resolve these disagreements fairly.