A young woman who became a paraplegic after falling from the fifth floor of a building was initially denied an insurance payout through her superannuation.
The issue came down to policy clauses and exclusions, which meant that her insurance cover had stopped because she had less than $3000 in her superannuation account.
The woman, then aged in her mid-20s, fell from the building in 2012 and was rendered paraplegic.
The banking royal commission heard superannuation fund REST and its group life insurer AIA argued the woman had no insurance coverage for total and permanent disability at the time.
The woman had joined REST, the default fund for the retail industry, when she started working at McDonalds but later became a cleaner for Swan Services, a company that collapsed in 2013.
The inquiry heard the insurer initially decided to pay her $108,000 TPD claim before REST's administrator drew its attention to a particular clause in the insurance policy that meant her cover ceased as the balance was less than $3000.
The woman was then told her claim was being denied.
She eventually received her payout, after launching court action.
REST executive Lachlan Ross said new medical evidence was presented during the litigation.
That evidence concerned the woman's mental health condition, which had been present from an earlier time.
"I think this is a very unusual case in that the member has been deemed to be totally and permanently disabled prior to them ceasing work," Mr Ross told the commission on Friday.
Another case before the inquiry showed a REST member left with post-traumatic stress disorder after being stabbed repeatedly was denied an insurance payout because of a technical rule.
Like 12 million other Australians, the retail worker had life insurance through his superannuation.
But his TPD claim was declined because he stopped working for the employer five days before he suffered multiple stab wounds in 2016, which meant his insurance cover had ceased.
The inquiry heard he missed out on a claim, despite continuing to pay insurance premiums, because of the operation of a rather technical rule that meant he was five days outside the terms of the policy.
Mr Ross said the policy was changed partly due to complaints from superannuation members.
REST, which has two million members, has removed the prescribed minimum balance clauses from its group insurance policy.
Insurer TAL faced further questions after spending years trying to find any way possible to stop paying a customer's benefits under her income protection insurance, including paying a private investigator $20,000 to follow her for months.
TAL executive Loraine van Eeden accepted the insurer's treatment of the woman over the past eight years caused her considerable distress.
But TAL's claims general manager said she could not comment on whether it exacerbated the woman's medical condition, as detailed in a psychiatrist's report.
The inquiry heard TAL also used heavy-handed tactics in cancelling a different woman's income protection payments after she was diagnosed with cervical cancer by arguing she failed to disclose a prior history of depression, before later reaching a settlement.
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