Wilco Life Insurance Designee for Notices Before Terminations California Class Action

Life insurance policies are often lifelong investments. However, in their later years, insureds may mis paying premiums because of illness or other difficulties, causing insurance companies to cancel the policies right before they are needed. The complaint for this class action alleges that Wilco Life Insurance Company has not followed California law that requires companies to take certain steps before canceling policies.

The class for this action is all persons who were entitled to receive proceeds, under life insurance policies issued by Wilco, and whose claims for them were denied on the grounds that the policy had been canceled for nonpayment when Wilco did not, at least thirty days prior to the effective date of the policy cancellation, mail a notice warning of the possible cancellation to a designated person named according to California Insurance Code Rules, and a known assignee or other person having an interest in the life insurance policy, between January 13, 2013 and the present.

The Flexible Premium Universal Life policy in question was taken out by Jean Schrader, in June 1998, with a face value of $200,000. The complaint says she made a payment of $45,687.03 when she took it out, a payment of $31,829.13 in August 1998, and one of $4,168.99 in November 1998. the mother of the plaintiff in this case, David Schrader.

The beneficiary was the Jean D. Schrader Insurance Trust, for which her son, David Schrader, the plaintiff in this case, was trustee.

Her health declined in 2013 and 2014, and she died in October 2014. When David Schrader made a claim, Wilco told him the policy had lapsed just three months before her death. The complaint alleges that Schrader should have received notice that the policy was about to lapse.

The California Insurance Code has provisions to protect insureds from this kind of situation, the complaint alleges. First, it requires a grace period of at least sixty days from the premium date. Second, notice of the termination must be sent to the policy owner, a designee, and an assignee at least thirty days before a termination for nonpayment of the premium.

This law is of benefit in particular for the elderly. The complaint quotes the notes in the Legislative history, stating that without this law, people can lose their insurance if they miss even a single premium payment: “If an insured individual loses coverage and wants it reinstated, he or she may have to undergo a new physical exam and be underwritten again, risking a significantly more expensive, possible unaffordable premium if his or her health has changed in the years since purchasing the policy.”

The complaint alleges that the policy had not been properly canceled, because “Mrs. Schrader had not been given the opportunity to designate someone to receive notices of cancellation; and he, as a beneficiary and Trustee, had not received mailed notice, at least 30 days in advance of the policy cancellation” because it pertained to nonpayment.

Article Type: Lawsuit
Topic: Insurance
Tags: Failure to Give Proper Notice of Termination/Cancellation, Improper or Unlawful Termination or Cancellation Policy, Insurance, Life Insurance