Paraplegic's battle for insurance payout

A young woman left a paraplegic after falling from the fifth floor of a building was initially denied an insurance payout through her superannuation.

Superannuation fund REST and its group life insurer AIA argued the woman had no insurance coverage for total and permanent disability at the time of her 2012 accident, an inquiry heard.

The issue came down to clauses and exclusions in the insurance policy, including that the woman's superannuation balance was less than $3000.

The woman was aged in her mid-20s when she fell from the fifth floor of a building and was rendered a paraplegic, the banking royal commission heard on Friday.

Her $108,000 insurance claim was eventually paid.

The royal commission also heard a man 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 total and permanent disablement claim was declined because he stopped working for the employer five days before he suffered multiple stab wounds in 2016.

That meant his insurance cover had ceased.

The inquiry earlier heard insurer TAL spent several years trying to find any way possible to stop paying a customer's insurance benefits, including paying a private investigator $20,000 to follow her.

A psychiatrist in 2017 found the woman's condition had progressively deteriorated over six years, noting her fearfulness and anger towards the insurance process.

He said the woman's level of suspiciousness, feelings of oppression, loss of trust and social withdrawal had worsened considerably and she was permanently unfit for work.

TAL executive Loraine van Eeden on Friday 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.

The woman made the claim in 2010 after an anxiety disorder meant she could no longer work as a nurse.

She continues to be paid benefits under her income protection policy but it is up for review this month.

The commission also heard TAL cancelled a different customer's income protection cover after she was diagnosed with cervical cancer, saying she failed to disclose a prior history of depression.

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