OLHI OLHI – OmbudService for Life & Health Insurance | Resolution of your Canadian Insurance Concerns | OLHI

Mr. and Mrs. H. applied for life insurance and were approved. When her husband died several months later, Mrs. H. claimed the benefits under the policy. The insurance company denied the claim for failing to disclose information about Mr. H.’s health.

Mrs. H. brought her final position letter to OLHI. She explained to our Dispute Resolution Officer (DRO) that a nurse had come to their home on behalf of the insurance company to collect blood and urine samples and fill out a questionnaire. During their conversation, Mr. H. told her about his high iron levels and his visits to a hematologist. The nurse noted “blood work normal” in her report despite his disclosure. Mrs. H. and her husband gathered the high iron was not important since the nurse did not take it into account, nor did the insurance company analyze his blood for this.

After his review of the information from Mrs. H. and the insurance company, the DRO recommended an OmbudService Officer (OSO) investigate further.

The OSO discovered that the company had not contacted the nurse to find out more about her visit with Mr. and Mrs. H. He recommended Mrs. H. contact this nurse, to see if she could validate their conversation. The nurse was unable to recall the specifics of their meeting.

While Mr. H.’s medical records showed he had been diagnosed with a blood condition, it was not disclosed in his insurance application. However, Mr. H. had signed this application, along with the report that the nurse prepared, confirming that all information provided was accurate. For this reason, the OSO recommended that there was no reason to further pursue this complaint.

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.

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.

Mr. F. had a term life insurance policy through this former employer, which also covered his wife as a dependent. On his 75th birthday, his coverage ended. He confirmed with the insurance company’s call centre that his wife’s coverage would continue because she was not yet 75. Not long thereafter, the company clarified that this particular policy had ended – but that there was an option to convert Mrs. F.’s coverage to an individual policy.

The insurance company explained that his wife’s policy had to be for a minimum of $50,000. However, Mr. F. wanted his terminated policy for $5,000 extended to his wife since she was not yet 75. When the insurance company denied his request, he brought the final position letter to OLHI and requested an independent review of his case.

OLHI’s Dispute Resolution Officer (DRO) read the insurance policy contract, which did outline that once coverage ended, the insurance company could issue an individual policy for an amount that did not exceed the old policy. For this reason, the DRO recommended the case be escalated to an OmbudService Officer (OSO) for further investigation.

After careful, thorough review, the OSO discovered that Mr. F. was confused about what a policy conversion entailed. He explained to Mr. F. that insurance coverage through an employer is known as “temporary insurance.” Once temporary insurance terminates, the policyholder has the option to convert that policy into an individual insurance policy. However, this conversion is not what Mr. F. was looking for; instead, he wanted his temporary insurance to continue until his wife turned 75. However, his policy stated that once the policyholder turned 75, all coverage for himself as well as his dependents would end.

As a result, the OSO maintained the insurance company’s decision.

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.

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.

Mr. M. had a $25,000 term life insurance policy. As the premium rates were about to increase dramatically and affordability was an issue, his insurance agent, who had originally sold him the policy, offered to research more affordable options.

This search proved a challenge. Mr. M. had health issues and, given the risks, few insurers would offer alternative coverage on a single life basis – at least, none that the consumer found affordable. At the end of the exercise, the agent proposed a joint last-to-die policy and wrote up an application for Mr. M. and his common-law partner, Ms. L.

The new policy was delivered and Mr. M. cancelled the previous one. He paid the premiums for just over two years before passing away. Ms. L. made a claim in order to pay final expenses and was surprised to have the claim denied because it was a joint-last-to-die policy. In such a policy, no proceeds are paid out until the death of the second spouse.

Ms. L. followed the insurer’s complaint process, where the insurer upheld its decision to deny the claim. She then brought her complaint to OLHI.

The Dispute Resolution Officer (“DRO”) reviewed the consumers’ documents and found anomalies in the application. The consumers’ statements in the application clearly indicated their intent to use the coverage for final expenses upon Mr. M.’s death and they designated Ms. L. and their daughter as beneficiaries – requirements that could not be met under a joint-last-to-die policy. The DRO recommended that the complaint be escalated to an OmbudService Officer (“OSO”) for further investigation.

The OSO reviewed both the file documents and the analysis from the DRO, and concurred that there were discrepancies in the sales process. He noted a lengthy delay in issuing of the policy and that there was no copy of a Life Insurance Replacement Disclosure form in the file. This disclosure form is required to be provided whenever a consumer replaces one life insurance policy with another. It provides a side-by-side comparison between the old and the new policies and serves to demonstrate that consumers understand the differences between the two policies.

Since recollections from the consumers and the agent differed, this missing form proved to be the crux of the issue.

In his detailed submission to the insurer, the OSO suggested that the lack of a properly completed replacement declaration form deprived Ms. L. and Mr. M. of the full and plain disclosure they were entitled to, and that their decision to purchase the new policy and cancel the previous one was not a fully informed one.

The OSO recommended that the insurer compensate the consumer for the loss of the $25,000 coverage provided by the original policy.

The insurer agreed to do so and the proposed payment was issued to the consumer.

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.

Mr. T. contacted OLHI to seek assistance with reinstatement of his retirement group life insurance benefit. The Dispute Resolution Officer who took the call learned that this benefit had been allowed some years ago as part of an early retirement package negotiated with his employer. The employer was a life and health insurer, and OLHI Member Company.

OLHI learned that all had proceeded smoothly for several years until Mr. T.’s former employer sent him a letter which he did not receive because it was mailed to an out-dated postal address. This letter contained a notice advising the consumer that a medical certification of total disability was required to maintain his life insurance benefit. That letter was followed by another from his former employer, a month later, advising that his life insurance benefit had been cancelled for lack of the required medical certificate. This second letter was sent to Mr. T.’s current address.

OLHI was told that Mr. T. had immediately called his former employer to address the situation, at which point he learned that the letters had been sent to different addresses because separate databases had been used to locate his contact information. As it turns out, the database used to send the first notification letter had not been appropriately updated. Upon learning of this administrative glitch, Mr. T. sought written confirmation that his life insurance benefit would continue as part of his retirement package. Much to his dismay, several months later, the company confirmed that it would not continue the benefit on the basis that there was no commitment to do so.

Fortunately, Mr. T.’s former employer elected to treat the situation as an insurance matter, rather than an employment issue. As a result, it provided Mr. T. with a “final position letter,” inviting him to contact OLHI if he was dissatisfied. As is customary, the insurer’s final position letter provided OLHI’s contact details and a brief explanation of OLHI’s independent role in assisting life and health insurers and consumers to resolve their differences.

Following the conversation with Mr. T. and a review of the insurer’s final position letter, it was decided that the facts of the case warranted further investigation by an OLHI OmbudService Officer (OSO). The OSO reviewed the information collected to date and then spoke at length with the consumer. He ascertained that the agreement to provide Mr. T. with early group retirement benefits had indeed been made some years ago and that it was an oral commitment made with his employment superiors of the day. The consumer was very concerned because he now believed himself to be uninsurable and because some of the subscribers to the original agreement were no longer with the company.

Subsequently, the OSO prepared a written submission to the consumer’s employer, setting out the facts and issues as he understood them. He suggested that, although there was no written confirmation on the part of the company to provide Mr. T. with retirement group benefits, the fact that coverage had been provided for many years was evidence of that commitment. It was suggested that the commitment could not be voided by a notification error for which the consumer was not responsible.

In due course, the consumer’s employer replied, advising that it had reconsidered its original position and had arranged with the employer’s group benefits insurer to reinstate the consumer’s group life insurance benefit. As before, the life insurance benefit was subject to ongoing medical certification of total disability.

The employer thanked OLHI for bringing the issue of conflicting address databases to its attention and confirmed that it had undertaken an internal review of its employee address records. This review resulted in the company changing its policy on record keeping practices for employee addresses so that problems of this nature would not occur in the future with Mr. T. and other current or former employees.

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. and Mrs. J. purchased life insurance which would pay for their funeral expenses. Two years later, Mrs. J. died of cancer and the family incurred funeral expenses of approximately $7,500.00. In due course, a claim was submitted to the insurance company for payment of these expenses. In accordance with normal practice, the insurer undertook a review of Mrs. J.’s health history to determine whether she had accurately reported this on her insurance application.

The claim was refused based on the insurer’s belief that Mrs. J. had incorrectly answered a health question on the policy application. Specifically, she answered “no” to the question: “During the past three (3) years, has the Applicant ever been treated for, or been diagnosed as having… both high blood pressure and diabetes together?” Had the question been answered accurately, the insurer would not have provided the insurance.

While it was acknowledged by Mr. J. that his wife suffered from diabetes, she had never been told that she had high blood pressure. On the other hand, the insurer was relying on a note in a hospital discharge summary (for arm surgery) stating that Mrs. J. had hypertension and was actively taking a medication for the treatment of angina and high blood pressure. Based on this information, the insurer felt that Mrs. J. should have answered “yes” to the question on the application.

Mr. J. was surprised to learn that his wife had high blood pressure and he took the insurer’s letter to their family doctor. The doctor confirmed that Mrs. J. did not have this condition. He also disputed the insurer’s information on Mrs. J.’s prescribed medication. The doctor had prescribed the medication for Mrs. J.’s diabetes, not high blood pressure, although the medication was commonly used to treat both conditions.

Mr. J. brought his complaint to the OmbudService and a Dispute Resolution Officer (DRO) reviewed the file. In light of the family doctor’s information, the DRO suggested that Mr. J. obtain a report from the family doctor describing her medical condition at the time she completed the application for the insurance. In this report, the family doctor confirmed that Mrs. J. did not have documented hypertension and that he had prescribed the medication for diabetes, not high blood pressure as alleged by the insurer. He expressed the opinion that her blood pressure may have been temporarily elevated due to the arm surgery and confirmed it had returned to normal after she recovered from the surgery.

OLHI forwarded a copy of the family doctor’s letter to the insurer with a request for it to review its decision. Upon reviewing the doctor’s letter, the insurer agreed that Mrs. J. had made correct disclosure of her health conditions on her insurance application. This resulted in the insurer paying the full benefit under the claim.

 

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.

In 2003, Mrs. C. purchased two whole life insurance policies – one for each of her children, A. and D. Both policies were purchased at the same time and had face values of $300,000 each. The policies were to have the same dividend options – bonus additions – which allowed for the face and cash values of the policies to grow if the insurer declared dividends. As is usual, at the time the policies were purchased, Mrs. C.’s life insurance agent showed her several written sales illustrations demonstrating how the various dividend options, although not guaranteed, would perform under various assumptions.

Mrs. C.’s intent was to select the same dividend option for each of the two policies based on the sales illustration she chose with the assistance of her agent. Mrs. C. did not speak or read English well and relied on her agent to fill in the application forms, including the selected dividend option.

Both policies were issued and annual statements were delivered to Mrs. C. After two years, she noticed that the type of bonus addition on her son’s policy was quite different from those for her daughter’s policy. She suspected that something was amiss and promptly called her agent to inquire about the discrepancy. She was advised to await her next annual statements.

When the third annual statements continued to show discrepancies between the two policies, Mrs. C. instructed her agent to look into the matter. His inquiries revealed that the dividend options were different for A. and D.’s policies. It appeared that A.’s policy was issued in accordance with the dividend option selected by Mrs. C. and indicated on A.’s application. In contrast, the dividend option section in D.’s application was left blank and hence the insurer applied the “default” dividend option as permitted by the contract.

The agent pointed out the mistake to the insurer, who agreed to correct the dividend option in D’s policy, but only on a “go forward basis”. Shortly thereafter Mrs. C.’s daughter contacted OLHI with a request that we assist in securing an adjustment to the dividend option from the date D.’s policy was issued.

Our Dispute Resolution Officer (DRO) quickly ascertained the facts, reviewed the necessary documents, and recommended that a letter be written to the insurer’s Ombudsman. He advised her to emphasize that the two policies were clearly to be identical, that an innocent error by the agent caused the problem, and that no steps were taken by the insurer to notify Mrs. C. that the policy issued for D. was issued with a dividend option that differed from that of the sales illustration.

This letter led to a detailed investigation by the insurance company. The insurer’s Ombudsman agreed with our DRO that the policy ought to have been issued in conformity with the sales illustration that accompanied the applications, failing which any discrepancy between the illustration and the policy issued for the son, D., should have been brought to Mrs. C.’s attention.

The insurer agreed that the most appropriate remedy was to correct the dividend option retroactively to the start of the policy, with resulting increases to the face and cash values of D.’s policy. The insurer also advised that the investigation of this case led to modifications to the insurer’s procedures to ensure that any similar cases in the future would be more promptly identified and resolved.

 

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.