DARTMOUTH, NS –
The sudden death of her 65-year-old husband from a heart attack in January was traumatic for Deborah MacDonald.
“He was going to move the car, you expect him back in five or 10 minutes,” she said with tears in her eyes. “I didn’t kiss him goodbye.”
Dealing with all the paperwork required when a spouse died, MacDonald quickly discovered that Terrance had taken out a guaranteed life insurance plan nearly two years prior.
“So we finally got the police number and figured out who to handle the claim and everything, and then we sent it all in, and then we went from there,” she says.
But RBC Life Insurance told him that his request had been denied. He said in an email that she would not receive the $10,000 death benefit because her husband died on January 30 – two days before the plan’s second anniversary.
According to a clause in the insurance contract, “if the insured dies before the second (2nd) anniversary of the contract, the death benefit will be limited to the sum of the premiums paid”.
Rather, it means MacDonald received approximately $1,385.
“Now I think, can I live here? May I stay here ? I was relying on the insurance money to even things out,” she says.
The Canadian Life and Health Insurance Association says this type of policy is typically offered to people who don’t qualify for standard life insurance, often due to health issues.
In an email to CTV it says: ‘For graduated policies there is a waiting period before full benefits are payable. Any claims made before the waiting period will result in a lower amount being paid out.”
He adds: “The waiting period allows insurers to offer graduated policies at an affordable cost to the individual.”
MacDonald says her husband had heart problems but was still working and doing well.
When asked to comment by CTV, RBC did not grant an interview, instead sending a statement, which reads in part:
“A two-year waiting period applies to this type of policy because there is no medical underwriting done at the time of purchase and after the two-year waiting period ends, coverage is in force. This is standard practice in the industry.
“It’s a pretty restrictive policy,” says Gordon Allen of Allen Law Inc., who handles insurance and personal injury law matters.
He advises one option would be to obtain the original application from the insurer, to check for discrepancies between it and the final contract.
Allen says a case like this can also come down to communication between the customer and the insurer, and whether all the terms have been clearly defined.
But unlike auto insurance, life insurance terms aren’t standardized by the Nova Scotia Insurance Act, which means they can vary depending on who you’re dealing with.
“Because of that, I think with life insurance you really have to look at what the contract is about and are you getting the value that you think you’re paying for, are there a number of solutions for that the insurer doesn’t pay you,” Allen said.
There are also several non-partisan, non-profit insurance dispute resolution organizations that can help if a consumer is unhappy with the outcome of the insurance company’s internal complaint process.
“Once you’ve gone through this process, your life or health insurer will issue you a final position letter,” says Tim Wilson, public education manager for the OmbudService for Life and Health Insurance., such an organization. “Once you have that final position letter, you can submit a complaint (with us) online.”
“Our role is to be an independent third party who can review a complaint and review both parties,” Wilson explains. “We’re looking at the original policy you purchased from your insurer and looking at what the insurer did, and the particular situation, and we’ll do an assessment of that.”
MacDonald says she is not done fighting for her claim.
“I’m very disappointed,” she said. “(RBC) didn’t even call me.”
She says she just wants to get what her husband has wanted for almost 30 years – the benefit of the insurance scheme he paid into to take care of her after she left.