There's no such thing as "small print" in any insurance contract, and certainly not within a contract aimed at consumers. Consumer insurance contracts are very easy to understand.
All insurance contracts set out what is and what is not covered...the word 'policy' is a misnomer - they are contracts, and like all contracts there are obligations each party must adhere to
The above said, pre-existing conditions are generally excluded, but it sounds to me as though you took out the insurance before your husband's condition was diagnosed, and what is happening is an extension of the original condition...and therefore did not exist when you took the policy out, and was therefore not pre-existing.
You need to speak to somebody a bit higher-up in the organisation as the person you spoke is either employing a bit of sharp practice, or doesn't understand how the contract works - I suspect the latter. Unfortunately the vast majority of the rank and file working in the consumer insurance industry are (a) generally young and (b) have no idea.