Denied a Critical Illness Insurance Claim Due to Family Medical History? Here's How the Court Ruled | Financial 315

Special Topic: 2026 3.15 Financial Complaint Exposure Platform

In personal insurance disputes, whether the policyholder has fulfilled the obligation of truthful disclosure directly affects the claim outcome. However, for most policyholders without professional insurance knowledge, complex contract terms can be confusing. If an insurance company uses this confusion to deny claims, protecting the rights of the insured becomes increasingly difficult.

Once again, on the occasion of the “3.15” International Consumer Rights Day, the Beijing Financial Court recently held a public hearing at the Financial Street Circuit Court on an appeal case involving a health insurance contract dispute. The court focused on the issue of the “policyholder’s obligation of truthful disclosure” and clarified several key questions: Is cancer a hereditary disease that can be inherited from parents? What is the difference between an insurance agent and an insurance broker? How is the scope of the policyholder’s obligation of truthful disclosure determined?

Did the “major tumor family hereditary risk” change before and after the insurance application?

Let’s look at the case details: In August 2022, Ms. Huang purchased critical illness insurance from an insurance company (hereinafter referred to as “M Insurance Company”) with an insured amount of 500,000 yuan, including a waiver of subsequent premiums upon diagnosis of a critical illness. In January 2025, Ms. Huang was diagnosed with lung adenocarcinoma. Her claim for compensation was denied by M Insurance Company, and Ms. Huang filed a lawsuit with the Beijing Chaoyang Court.

The first-instance court ordered M Insurance Company to pay Ms. Huang 500,000 yuan in insurance benefits, waive her future premiums, refund her paid premium of 6,454 yuan, and keep the insurance contract valid. Dissatisfied, M Insurance Company appealed to the Beijing Financial Court.

What was the reason for the insurance company’s denial? M Insurance Company argued that Ms. Huang deliberately concealed her family history of tumors, including her mother’s breast and ovarian cancers and her grandmother’s lung cancer. Ms. Huang knew she had a significant hereditary risk of tumors but did not disclose it when applying for insurance, which was a subjective act of intentional concealment. Therefore, they refused all of Ms. Huang’s claims.

According to information disclosed by the Beijing Financial Court, four major issues were the focus of the second trial: First, the validity of M Insurance Company’s questions about “family tumor history” and the method of inquiry; Second, whether the sales personnel were insurance agents or brokers; Third, whether the policyholder violated the obligation of truthful disclosure; Fourth, whether M Insurance Company’s denial and contract termination had factual and legal basis.

To address these, the Beijing Financial Court clarified several key concepts related to the insurance contract involved.

First, the so-called policyholder’s obligation of truthful disclosure refers to the duty of the policyholder to honestly inform the insurer of important facts about the insured or the insured object at the time of contract formation, enabling the insurer to accurately assess whether to underwrite and at what rate. According to relevant provisions of the Insurance Law and its interpretations, the scope of the policyholder’s obligation of truthful disclosure is limited to matters explicitly inquired about by the insurance company.

Second, M Insurance Company’s question in the “Personal Insurance Electronic Application Form” was whether “the insured currently suffers from or has previously suffered from hereditary diseases,” not whether there is a family history of tumors. Additionally, the contract’s definition of hereditary diseases did not include any mention of family tumor history. The Beijing Financial Court held that neither medical expertise nor ordinary consumers recognize “family tumor history” as “hereditary disease.” Therefore, M Insurance Company’s inquiry about “family tumor history” in the electronic application form was not clear or valid.

Third, Ms. Huang contacted an insurance broker, not an agent of M Insurance Company. According to the “Measures for the Administration of Insurance Sales Behavior,” insurance brokers are also considered insurance sales personnel. On one hand, the questions asked by insurance brokers are not directly equivalent to those asked by insurance companies; on the other hand, if M Insurance Company authorized the broker to ask questions, the legal effect of Ms. Huang’s disclosure should also be attributed to M Insurance Company.

The Beijing Financial Court stated that Ms. Huang truthfully disclosed her family members’ tumor conditions to the sales personnel, who did not further inquire in detail nor refuse her to continue with the application. Therefore, based on the evidence, Ms. Huang did not violate her obligation of truthful disclosure. Considering the contractual agreements, the court ruled on the spot: the appeal was dismissed, and the original judgment was upheld.

Nearly 70% of personal insurance cases involve “obligation of truthful disclosure”

First Financial reporters found that on the judgment document website, many cases involve disputes over the policyholder’s obligation of truthful disclosure in personal insurance contracts. Complaints about unreasonable claim denials by insurance companies are also common on third-party complaint platforms [Download Black Cat Complaint App].

“Statistics show that nearly 70% of personal insurance cases involve clarification and determination of the policyholder’s obligation of truthful disclosure, and the outcome can have a transformative impact on insurers and insureds.” Hao Di, Deputy Head of the Beijing Financial Court’s Filing Division and the presiding judge of the case, said that the deep integration of internet technology into the insurance industry has profoundly impacted and changed traditional processes such as underwriting, claims, and policy issuance, making the fulfillment and assessment of the obligation of truthful disclosure more complex.

A senior insurance broker told First Financial that insurance sales may seem simple but are actually very complex. Even within the same insurance product category, differences in product pricing among companies are often due to subtle contractual details. Coupled with ongoing disagreements in the medical and insurance fields over certain conditions, it is not easy for ordinary policyholders to thoroughly research before purchasing and to ensure smooth claims afterward. If sales personnel focus solely on performance without proper explanation or guidance, the likelihood of disputes increases significantly.

Hao Di pointed out that under China’s “Inquiry and Disclosure” model, insurance companies should make inquiries within a reasonable scope, clearly and explicitly. When professional terminology is used, explanations should be provided. Arbitrary expansion of inquiry scope or ambiguous language should be avoided. If the questions involve general or vague terms, the principle of interpreting ambiguous clauses in favor of the insured should be applied to achieve substantive fairness.

It is understood that the principle of interpreting ambiguous clauses states that when contract terms are unclear or ambiguous, the interpretation should favor the party providing the standard form clause, usually the insurance company. The Insurance Law also stipulates that “when a contract clause has more than one interpretation, the court or arbitration body shall interpret it in a way that is favorable to the insured and beneficiaries.”

She further explained that this case, through circuit court trials and exemplary rulings, guides insurance companies to standardize their practices in underwriting, claims, and other processes, supporting the sustainable and healthy development of the insurance industry. “In this case, the insurance company’s inquiry in the ‘Personal Insurance Electronic Application Form’ was about hereditary diseases, not family tumor history. Objectively, based on current medical knowledge, it is also difficult to classify tumor family history as a hereditary disease. Moreover, Ms. Huang did not conceal her mother’s illness when applying. The insurance company’s demand for consumers to proactively disclose beyond the inquiry questions is not conducive to protecting consumers’ rights and interests, nor to the sustainable development of the health insurance industry,” Hao Di concluded.