Is it legal to cancel life insurance without notification

[policy cancelle]

What is the name of your state (only U.S. law)? Massachusetts

We carried our life insurance policy via the portability option after leaving former place of business. The business later changed the insurance company from Boston Mutual to MetLife. It took several weeks to correct the mess that was made with this change, especially since we were carrying the policy as we were.

MetLife policy was effective Oct. 07, we started receiving statements on Dec 27, 07. The first due date was 1/17/08, payment received 1/15/08. #2, was due 2/15/08, paid on 2/24/08, #3 due 3/19/08 payment received by MetLife on 5/16/08, #4 due 4/17/08, payment made on 5/14/08 but they did not process until 6/3/08. With the last statement a request was made to switch to quarterely statements. Therefore, it never occured to me until doing 2008 taxes that we never received a statement beyond #4. No further statement or communication was made to us from MetLife. As soon as I noticed this I contacted MetLife to inquire as to why we had no further statements. In turn, they sent a check to us in the amount of the last two payments. I called again to inquire and I was told they cancelled the policy in 2008. Yet, they never returned any payments at that time nor did they notify us of pending cancellation or a cancelled policy. Are there grace periods for life insurance policies? How is it possible that they cashed and did not apply the last two payments to the policy? Now a year later, they are sending us a check for those last two payments. How is it possible that they do not notify a customer of pending or cancelled policy? This appears to be illegal to me. Please advise, I am very upset by this. I think that Metlife is wrong and should reinstate the policy without question. Any advice is appreciated.

 

[Dandy Don]

What reason did they give for canceling the policies? If you think you have been treated unfairly, then file a complaint with your state's insurance commissioner so he can investigate it.

 

[policy cancelle]

The message left for me today, stated the policy was cancelled in 2008 due to lapse in coverage. Stating the bill dated March with due date of April 17, was for $74.32, however that included the prior amount due of 37.16. I know for sure they received that amount of 37.16 on May 16 as it was done electronically. They however stated that they did not receive payment until June 3. That very well may be so for the remaining 37.16 that was mailed on May 14, 08 as that check was posted on June 3.....why did it take so long to post that check and why is the May 16 payment received not posted. To me they messed up too.

 

[Dandy Don]

I'm not saying it's what happened here, but sometimes insurance companies do deliberately delay the posting of the payments received so they can have an excuse to falsely claim that coverage is "lapsed". I would be filing a complaint with the insurance commissioner.

 

[ErinGoBragh]

The message left for me today, stated the policy was cancelled in 2008 due to lapse in coverage. Stating the bill dated March with due date of April 17, was for $74.32, however that included the prior amount due of 37.16. I know for sure they received that amount of 37.16 on May 16 as it was done electronically. They however stated that they did not receive payment until June 3. That very well may be so for the remaining 37.16 that was mailed on May 14, 08 as that check was posted on June 3.....why did it take so long to post that check and why is the May 16 payment received not posted. To me they messed up too.

Have you offered to send them electronic verification of your payment? Have you asked them for proof of receipt of the payment on June 3rd? They should have some sort of documentation to provide.

Also, why did you pay the remaining $37.16 almost a month late? You do realize that if $74.32 was owed on April 17th, and you only pay half, the policy can lapse because it's not paid in full, right?

And Dandy Don, while I understand what you're saying, in general, there are FAR more drawbacks to an insurance company to let a policy lapse than to let it remain in force. OP may have hung himself by already having a prior amount due then only sending in partial payment.

 

[ErinGoBragh]

BTW, there are no mandatory grace periods for life insurance policy. The company I work for has 30 days, but this isn't required, and sending in a partial payment when you have already been late would probably make you a candidate for a lapsed policy. They likely did not apply the last two payments to your policy because your policy was cancelled effective prior to the date of your last two payments which were both late. Why it took them so long to reimburse you, I would call them and ask.

I will say, that particularly with any kind of insurance, it is VERY important to pay your bill on time, be it auto, home, life, or whatever, since the consequences of being late and not paying can be expensive.

You can request a reinstatement, but after so much time has gone by, if you are eligible you will likely need to do a reinstatement application and if your age or health has changed, the cost of that policy will go up.

Unless you can come up with evidence that they committed some sort of fraud, which I do not see evidence of here, they did not do anything illegal and you are SOL (and I don't mean Statute of limitations).

 

[policy cancelle]

To clarify billing info. Statement 12/2707 for 135.04 paid in full on 1/14/08 (due 1/17). Statement 1/25/08 for 40.56 due 2/15, paid in full 2/24/08. Statement 2/27/08 for 37.16 due 3/19 somehow missed (dont recall why) but paid in full electronically 5/14 with confirmation receipt of acceptance to MetLife my bank on 5/16. Statement 3/27 for 74.32 (which included the 2/27 amount of 37.16 paid electronically on 5/14) so I paid the current bill amount of 37.16 which I mailed on 5/14 but they did not processed until 6/3/08 (i have the cancelled check).

So they cashed/accepted the last two payments, never returned them nor did they post them to my account, instead just never sent any further statements then telling me the policy lapsed in my recent phone call. Why were the payments never returned if not accepted? I am awaiting yet another return phone call from MetLife. Something more, other than my being late with payment, is wrong here. Any other thoughts.

I just read the thread from the poor woman whose insurance lapsed unknowingly and her spouse has since died. I am afraid of the same happening some day. This is just wrong. Life insurance companies should be required to send notification by mail or registered mail if a policy is about to lapse or has lapsed. Most certainly homeowners and auto insurers do.

 

[ErinGoBragh]

I stand by my original advice of offering proof that you paid on X date to the company.

Also, have you talked to the person who sold you the policy? They are here to help you with this type of thing.

As to "Why were the payments never returned if not accepted?"... I don't know, my crystal ball is broken. Ask them though.

I still see, from what you wrote though, that one of your payments was late, and will reiterate that being late can cause a lapse. Usually you get a 30 day grace period before a lapse, and if your payment was due 3/19, and you didn't pay until 5/14, you were well over 30 days late.