CR19 Funeral Insurance – non-renewal of policy under dubious circumstances.
• Funeral Insurance – non-renewal of policy under dubious circumstances.
In a recent case a complaint, commencing as one about the cancellation of two policies, in time developed a completely different momentum. The complainant took out two funeral policies, the one in 1998 in respect of her brother and the other in February 1999 in respect of her niece. The policies were five-year term policies. The policy document in each case provided that the basic term was a five-year period with the option to the policyholder, within 3 months before or after the renewal date (being the date on which the basic term would end), to renew cover for another basic term provided that a new application form was completed. In addition waiting periods and limitations on cover due to natural causes would once again apply.
The complainant duly paid, and continued to pay, the premiums in respect of both policies even though both policies expired at the appointed time, the one in 2003 and the other in February 2004, without application having been made for their renewal.
The insurer thereupon issued cheques for the refund of the over-payment of premiums.
On 30 September 2004, long after both policies had expired, the complainant complained about their cancellations and in particular that neither she nor the lives assured were informed of the imminent expiry of the policies. She also complained about the amounts of the repayments. She asked that each policy should be renewed as from the previous expiry date, that is to say, in the case of her niece in particular, from 1 March 2004.
The insurer responded that in the light of the explicit policy wording it was under no duty to caution the lives assured or indeed the complainant to renew their cover prior to the contractual expiry date.
The insurer was, however prepared to “provide you with the opportunity to renew these benefits” and to “waive the relevant waiting periods.”
The complainant wrote back on 20 October 2004 to confirm that, inter alia, her niece’s policy was to be renewed, albeit at higher rates, as from 1 March 2004. She asked for the necessary application form to be forwarded to her. She also returned the two refund cheques and tendered payment of the amounts due on both policies, once renewed.
On 29 October 2004 she wrote to this office complaining that the insurer, contrary to her urgent request and its promise to her to do so, had failed to send an agent to her home with the required application forms.
It was only thereafter that it transpired that her niece had actually passed away the next day, 30 October 2004, from natural causes.
The complainant thereupon claimed payment on the policy in respect of the death of her niece. The insurer responded, “Prior to this information coming to light we were still prepared to have the Application Form completed. However, under the circumstances, signing an Application Form for an Assured Life that is no longer alive would prove futile.
In our view the client was well aware of the assured life’s medical condition, hence her persistence for someone to come to see her on 29 October 2004. She mentioned on several occasions that the matter could not be delayed. If indeed the client was not satisfied with this arrangement and was not prepared to delay the matter any longer, the responsibility to approach any in-house adviser rested with her. Also, from a contractual point of view, we were not obligated to make any claim payment since the Application Form was never completed.”
The insurer’s approach was, in our view, entirely correct. The completion of an application form in respect of her niece was clearly a prerequisite for the issue of a new policy. The problem that may well have arisen if an application form had been completed on 29 October 2004, with or without a full disclosure of the niece’s then medical condition, accordingly did not eventuate. The complainant failed to inform us whether she wanted the insurance in respect of her brother to be continued. In the circumstances our file was closed.