In 2014 a man took out life insurance. He named his de facto partner as the beneficiary of the policy. In his application he had claimed to be a healthy individual who did not take drugs, and who lead a healthy lifestyle. The policy was for $2,625,000.00.
Tragedy struck a few years later when the man committed suicide. The man’s partner made a claim on the policy.
This claim was rejected by the insurer. The insurer claimed that as there was evidence that the man had used cocaine before he took out the policy, and therefore the insurance contract was voided due to breach of the duty to disclose.
The man’s partner took the insurer to Court arguing that she should be entitled to the insurance payout as the policy had been entered into years earlier. She also claimed that her partner was only an “occasional user” of cocaine, and that a reasonable person would not have known that taking cocaine would have an impact on his life insurance coverage.
The insurer disagreed. The insurer gave evidence in Court showing that the man was chronically addicted to cocaine, and that a rehabilitation clinic had records showing him to have a “binging issue” with cocaine and amphetamines.
The Court decided that the man did have a chronic drug addiction and that his failure to disclose this when applying for life insurance meant that the man had acted fraudulently, and that the insurer would not have entered into the policy if it had known. As a result, the partner’s claim failed.