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Cancelling an insurance policy – OLHI clears up a mistaken COI charge

Posted on: June 9, 2023

Dale had a universal life insurance policy.

When his insurance company told him they were going to charge him another premium for the policy, Dale decided to terminate it.

To avoid a Cost of Insurance (COI) charge, the insurer told Dale to send a signed insurance cancellation letter to the same day he terminated his policy.

However, Dale’s insurer didn’t inform him that he needed to include his social insurance number (SIN) in the termination letter. Without the SIN, his policy termination got delayed and Dale was charged the COI. As a result, he received a lower refund than expected.

After he received a final position letter from the insurer, Dale reached out to OLHI to review his complaint.

OLHI’s review confirmed that his insurance company did not tell Dale he had to include his SIN in the letter.

OLHI’s review also found that even after Dale sent in the letter with his SIN, the company asked for it again. OLHI recommended that the insurer reconsider the COI charge for two reasons:

The company did not initially communicate that Dale needed to include his SIN in his termination letter.

When the insurer said Dale needed to include the SIN, he did so, and sent the termination letter within the same day, so the company should have processed it effective as of the receipt date.

Consequently, the insurer agreed and backdated the termination and refunded the COI charge.

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.

Side effects of medications (health)

Posted on: August 27, 2016

Ms. E. had extended health insurance through her employer. She disclosed that she suffered from seizures. This insurance also covered out-of-country emergency medical expenses. While on vacation, Ms. E. became ill and was hospitalized. Doctors determined that she had a bad reaction to a drug she was taking to treat a pre-existing condition. While in hospital, Ms. E. became worse due to an unrelated illness and had to return to Canada immediately.

The insurance company covered the costs of Ms. E.’s transportation back home to continue her care. However, in their final position letter, they stated they would not cover treatment for her reaction to the drug. The company decided that Ms. E.’s pre-existing condition extended to any side effects from medications taken for this condition.

Ms. E. asked OLHI to become involved. She told our Dispute Resolution Officer (DRO) that she believed her insurance company was setting a bad precedent. She said their decision could lead to denying coverage to any person on medication who suffers a side effect. For example, Ms. E. questioned what would happen if a person has a bad side effect from an over-the-counter pain reliever. Could the insurance company refuse to cover treatment, if this pain reliever treats a pre-existing condition?

The DRO recommended that an OmbudService Officer (OSO) investigate Ms. E.’s case. The OSO learned that a doctor saw Ms. E. when she returned to Canada. The doctor felt that it could not be proven with certainty that the Ms. E.’s problems were side effects of her medication. He suggested that her problems could have been caused by the unrelated illness she had after she was hospitalized.

The OSO contacted the insurance company’s Ombuds office. He advised that Ms. E.’s policy did not specify that it would not cover side effects from a medication. He also reinforced the fact that there was uncertainty around what caused Ms. E.’s illness. This made it impossible to tell, conclusively, that her treatment was for her pre-existing condition. He recommended that the insurer reconsider its position and pay Ms. E.’s claim.

The insurer, upon further reflection, agreed and provided payment on the out-of-country medical expenses.

Chronic pain and disability (disability)

Posted on: February 2, 2016

When Ms. W. went on long-term disability after suffering degenerative disease in her knees, both her individual disability benefit plan provider and the Canada Pension Plan accepted her disability and began paying out her claim. However, when she submitted her claim to her group plan provider, through her employer, she was declined, much to her surprise and confusion.

The insurer explained that definitions of disability differ between insurers and between policies; as a result, an insurer could not base a decision on that of another. Ms. W.’s insurer stated, in its final position letter, that although medical notes indicated inability to deep knee bend, kneel or run, they did not mention any difficulty with sitting or complete intolerance to any driving, walking or standing. For this reason, the insurer noted that their claim denial decision was made based on the level of information provided.

When Ms. W. contacted OLHI, a Dispute Resolution Officer (DRO) learned from Ms. W. that she did in fact have trouble sitting for long periods of time and as such could not work full time – and any part time income would not equal what she was earning either in a job or through disability payments. Jobs in her field required a lot of manual labor, which she could no longer perform.

The DRO also discovered, when going through Ms. W.’s file, the insurer’s medical consultant had suggested that more tests be undertaken – none of which were run or requested by the insurer. Additionally, all medical notes from Ms. W.’s doctors noted that her condition would likely worsen over time, making it increasingly difficult to perform physical tasks.

Based on this information, the DRO recommended the case be escalated to an OmbudService Officer (OSO). The OSO’s investigation revealed reports from the family doctor, written after the claim period in question. The doctor wrote that Ms. W. could not spend time in any particular position (sitting/standing) for more than a few minutes at a time, making it impossible for her to drive to a job and work. The insurer had also noted in its file that, given her relatively young age, she be assessed to determine whether any jobs would be best suited for her. The insurer suggested Ms. W. could be capable of certain jobs in her industry that are sedentary with the ability to change her body’s position frequently, from sitting to standing. This belief was further confirmed by a medical note in Ms. W.’s file, written by her doctor, where he suggested she be trained to perform a sedentary job.

Resulting from our OSO’s extensive research into the case, where he spoke with the consumer, her doctors and the insurer, he concluded that the medical records available for the specific time period at hand did not support complete inability to perform work. The OSO advised that it was his recommendation that the insurer’s decision be upheld.