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

Mr. F., diagnosed with cancer, made a claim on a Critical Illness insurance policy. If his claim was accepted, the insurance would have paid off a $10,000 loan he had taken out with his bank. His claim was denied on the basis that he did not have Critical Illness insurance coverage on the loan.

Mr. F. received his insurer’s final position letter and contacted an OLHI Dispute resolution Officer (“DRO”), seeking an independent review of his complaint.

During several conversations and exchanges of emails, our DRO learned that Mr. F., who had a prior line of credit that covered him for Critical Illness, converted this into a new loan a short time before making the claim. The bank denied his claim because this new loan was not insured for Critical Illness and he was diagnosed with cancer after the new loan was made.

Mr. F. claimed that he was diagnosed in early April and that the new loan was not taken out until later that month. Therefore, the coverage from the previous line of credit should be applied to pay out his claim. Meanwhile, the insurer stated that its denial was based on medical reports indicating that the cancer was not diagnosed until June, long after the line had been closed and replaced with a loan that did not provide Critical Illness coverage.

During his review, the DRO assessed that there were conflicting dates in the medical reports relating to the diagnosis date. He also questioned why Mr. F. would have taken out a new loan when he was ill, since that would result in him becoming ineligible for Critical Illness coverage under the new loan. As a result of this, the DRO recommended that the complaint be escalated for further investigation by an OLHI OmbudService Officer (“OSO”).

The OSO poured over medical records, as well as the insurer’s file and the consumer’s documents, and had several conversations with all parties. The focus of his review was to determine whether a diagnosis had been made before the cancellation of the Critical Illness insurance coverage on the prior line of credit. Medical records showed that the confirmed date of diagnosis was in fact in June, two months after the old line of credit was closed and the new loan opened.

While written communications in early April between Mr. F.’s doctors showed mention of cancer, it was referred to as a suspected illness requiring further investigation and formal confirmation. Because insurers pay Critical Illness benefits based on clear diagnoses, not suspected conditions, his insurer would not have paid out the claim in April.

The OSO, through his investigation, also learned why Mr. F. took on a loan that wouldn’t provide critical illness coverage at a time when he needed this coverage most: Mr. F. admitted that, when speaking with the bank to set up the new loan, he did not advise that he might have cancer.

Because the bank did not have this information, they could not advise him to keep his current lines of credit, which provided Critical Illness, rather than taking on a loan that did not provide this coverage.

As a result, the OSO recommended to Mr. F. and the insurer that the original claim denial should be upheld.

 

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.

Mr. S. contacted OLHI seeking help with the approval of his disability benefits. The OLHI Dispute Resolution Officer (DRO) who took his call learned that he had purchased a vehicle some years before and financed the purchase with a loan. At that time, he signed up for group creditor insurance that would pay his monthly car loan payments in the event he became totally disabled. Thereafter, Mr. S. was diagnosed with a terminal condition. He applied for the disability benefits but his claim was denied on the basis that it was out of time.

Our DRO was able to determine during the call that Mr. S. had not received the insurer’s final position letter. He advised Mr. S. that he would need to complete his insurer’s internal complaints process before OLHI could review the complaint. Mr. S. was provided with the contact information for the insurer’s Ombudsman.

About a month later, Mr. S. called back upon receipt of his insurer’s final position letter. The DRO explained that OLHI would open a complaint file once Mr. S. signed and submitted OLHI’s Authorization Form and other relevant documents. Thereafter, OLHI would request documents from the insurer and both he and the insurer would be notified in writing that the complaint was under OLHI’s review.

Upon receipt of the documents from both parties, it appeared to our DRO that Mr. S. might have a reasonable case. She recommended that the complaint be transferred to an OmbudService Officer (OSO) for further investigation.

The OSO reviewed the sequence of events. Mr. S. last worked in October, 2010. In 2009, he had bought a new car and, through the dealership, purchased creditor life and disability insurance with a single premium that was spread over his monthly car payments. Following his disability diagnosis in the fall of 2010, he applied and was approved for CPP disability in June 2011. Mr. S. was under the mistaken impression that he had to apply for the CPP disability benefit before applying for any other benefits. His anxiety over his disability diagnosis and the consequent need for him to focus on daily living activities had caused him to lose track of the fact that he had creditor disability coverage.

Mr. S. filed his claim in August 2011. The insurance policy required him to provide his insurer with notice of the events giving rise to the disability within 30 days and to provide medical evidence establishing his claim within 90 days of onset of disability. As a result, the insurer’s final position letter denied his claim on the basis that it was filed too late.

The OSO spoke to Mr. S. and explained the reasons why the insurer was within its rights to rely on the time limitations set out in the policy. However, he suggested that it might be possible to obtain a settlement whereby the loan payments would be covered from the date the insurer was provided with notice of the claim. Mr. S. readily agreed that this would be an acceptable resolution of his complaint.

The OSO subsequently made a detailed written submission to the insurer, suggesting it pay the benefits from August 2011 onwards. The basis for this suggestion was that the disability was clearly established and the insurer was not prejudiced if the claim was admitted on a “go forward” basis.

The insurer responded in short order, agreeing to allow the claim from the date it received notice. This resulted in Mr. S. receiving a reimbursement for the payments made by him while he disputed the claim with his insurer and during OLHI’s complaint process. The insurer also paid the loan instalment payments from that point forward.

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. G. purchased a trailer, he enrolled in the group creditor insurance plan offered by the dealership. His paperwork confirmed he had requested both life and disability insurance in connection with the financing on his trailer.

He subsequently became disabled and contacted the dealership about submitting a disability claim to cover his loan payments while he was unable to work. It was then that he learned the loan on his trailer carried life insurance only, despite the paperwork he had in his possession.

Mr. G. confronted the dealership representative about the problem with his coverage. The representative admitted responsibility and confirmed he had made a mistake. At one point, the dealer even offered to pay the disability premium on Mr. G.’s behalf but subsequently reneged on the offer.

By the time he called OLHI, Mr. G. had made numerous attempts to resolve the problem on his own, to no avail. He was very frustrated, particularly because it was not clear with whom he should be dealing. Should he pursue his complaint with the dealership, the insurer’s third party administrator, or the insurance company itself? On the surface, it appeared that he had been disadvantaged as a result of the actions of the dealership, not the insurer nor its administrator. However, additional fact finding would be required to determine the best course of action to resolve the situation.

As a first step, an OLHI Dispute Resolution Officer (DRO) called the third party administrator, whose role it is to administer the insurance plan on behalf of the insurer. It was confirmed that only a life insurance certificate had been issued for Mr. G. and that he had no disability coverage in place. At this point, our DRO became concerned that even if Mr. G. or the dealership would agree to pay the premium for the disability insurance, the insurer would not agree to entertain Mr. G.’s disability claim. Accordingly, our DRO wrote to the insurer’s Ombuds Officer, apprising him of the situation and enquiring whether the insurer would consider Mr. G.’s disability claim if it received payment of the premium.

The insurer’s representative advised OLHI that it was conducting an investigation into the matter. They had already spoken with the dealership and were in the process of contacting Mr. G. to obtain his side of the story. Our DRO subsequently followed up and inquired, once again, if the insurer would accept responsibility for the claim if its’ investigation showed that the dealership was at fault and the premium was subsequently paid. She was advised that the insurer’s Ombuds would confer with senior management.

Eventually, a settlement was reached whereby the dealership agreed to pay half of the disability premium, Mr. G. agreed to pay the other half and the insurer agreed it would consider the disability claim upon receipt of the full premium.

Mr. G. expressed his gratitude for OLHI’s assistance in concluding a settlement that ensured his disability claim would be considered, thus satisfying his original expectation that he was insured in the event of disability.

 

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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