After Mr. J.’s father died, he claimed the benefits under several term life policies with the same insurance company. All were paid out, except one, which had lapsed several years prior for non payment of premiums. The insurance company denied the claim because they had mailed Mr. J.’s father a Notice of Premium Due before the policy lapsed.
Mr. J. brought his final position letter to OLHI. He explained to our Dispute Resolution Officer (DRO) that his father did not receive the Notice. Acting as his father’s Power of Attorney, Mr. J. had contacted the insurance company to set up automatic payments for the premiums. At the same time, he asked the customer representative about the status of all the policies. The representative assured Mr. J. that all were in good standing.
OLHI’s DRO reviewed information from Mr. J. and the insurance company. She recommended an OmbudService Officer (OSO) investigate further. In his review, the OSO noted two key details: First, not only was Mr. J. told in a phone call that all policies were in good standing, he also received a letter two years later, confirming that all the insurance policies were in force – including the lapsed policy. Second, the insurance company’s Notice was sent to the wrong address. When the mail was returned to the company, it did not check its records for the accurate address. The correct address was in fact on file with the insurance company.
The OSO contacted Mr. J.’s insurance company to discuss the situation. He explained that Mr. J. had called the insurance company during the period of time when the policy could have been reinstated. Had he been told about the lapse then, it was reasonable to believe he would have reinstated the policy since he already had several other policies with the company. Because he was given wrong information, the window to exercise the right to reinstate had passed.
The insurance company agreed with OLHI’s recommendation to pay the insurance benefit on the remaining policy.
Disclaimer: Names, places and facts have been modified in order to protect the privacy of the parties involved. This case study is for illustration purposes only. Each complaint OLHI reviews contains different facts and contract wording may vary. As a result, the application of the principles expressed here may lead to different results in different cases.