insurance policy – OLHI – Free, impartial help with your life & health insurance complaints

Mrs. U. purchased life insurance in 2006. She explained to her agent that she only wanted a policy that would cover her for 10 years and that she planned to cancel when the term expired. She said she would not be able to afford the new premiums, which would rise dramatically after 10 years.

Mrs. U.’s agent explained that a renewal notice would arrive in the mail but that she would call her before the policy was up for renewal, to confirm her intention to cancel.

In 2016, the policy’s 10-year term expired. Mrs. U. did not receive a phone call. Instead, her policy automatically renewed and higher premiums were taken out of her bank account. She contacted the insurance company and asked to cancel her life insurance policy and be reimbursed the cost of the new premiums.

Mrs. U.’s insurance company declined her request to be reimbursed. Its final position letter outlined that a renewal notice had been sent to her and she did not respond, so the policy was automatically renewed.

Mrs. U. brought this letter to OLHI for a review of her complaint. OLHI’s Dispute Resolution Officer (DRO) asked her and the insurance company to send all their documents relevant to this case. In his review, the DRO studied the policy contract and also learned from Mrs. U. that she had not expected the policy to automatically renew. She thought that if she did not renew, it would lapse.

OLHI’s DRO recommended that an OmbudService Officer (OSO) further review the contract language in Mrs. U.’s policy. The OSO discovered unclear wording about policy renewal. It implied that consumers had a choice – leading them to believe their approval was required ahead of renewal. The legal principle of contra proferentem dictates that unclear language allows for consumers’ interpretations of the contract.

The OSO recommended that Mrs. U. be reimbursed the majority of the premiums. Because the renewed policy was in force and would have paid out had she died, he recommended it was not possible to reimburse 100%. Mrs. U. and the insurance company agreed.

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.

When Mr. N. purchased life insurance in 2000, he explained to his agent that he wanted to pay the same monthly premium for the lifetime of the policy. His agent helped him fill out an application and also provided him with illustrations to show how his premium would never change.

Fifteen years later, Mr. N.’s premiums increased. He contacted the insurance company, asking that his previous premium be reinstated and that he be reimbursed the difference. In the final position letter, Mr. N.’s request was denied. The company pointed to the wording in the contract, which stated the level premium was for the first 10 years of the policy, after which time the cost of insurance could be increased. Mr. N. was given the option to reduce the sum insured, in order to bring his premiums back down to the original cost.

Mr. N. decided to bring this letter to OLHI. OLHI’s Dispute Resolution Officer (DRO) reviewed the contract and spoke with Mr. N., who told her that his insurance agent recently told him that he wholly believed he had sold him a level policy for its lifetime. The DRO also saw that the agent’s illustrations clearly indicated a monthly premium for life. She recommended that an OmbudService Officer (OSO) investigate further.

The OSO spoke with both Mr. N. and the insurance company to better understand their positions. She also delved deeper into the contract language, finding multiple examples of conflicting, ambiguous statements. In some instances, the policy stated the cost would be level for the duration of the policy. In others, it stated the cost could be adjusted.

The OSO approached the insurance company, pointing to the legal principle of contra proferentem. This principle states that, where there is unclear language in an insurance contract, consumers’ interpretations of the meaning of the contract are permitted. For this reason, she recommended that Mr. N.’s previous premium be reinstated and that he be reimbursed the difference in price. The insurance company agreed.

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.

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