Three judges at the 9th U.S. Circuit Court of Appeals have ruled in favor of the life insurer in a term life policy lapse case.
The insurer, Foresters Life Insurance and Annuity Co., did violate California's policy lapse notice rules, but the plaintiff, Pamela Siino, would not have benefited if Foresters had followed the rules because she moved without sending the insurer a change-of-address notice, according to an opinion written by Judge Milan Smith Jr.
A district court judge in the Northern District of California refused to let Siino represent a class of policyholders affected by policy lapse notice problems, but she ruled in favor of Siino on other issues.
The 9th Circuit panel affirmed the district court in part, by finding that the district court had the authority to consider Siino's request for relief, but the panel reversed the district court in part by ruling that the district court should not have ruled that Siino's life insurance policy was still valid.
Representatives for Siino could not immediately be reached for comment.
A representative for Foresters said the company respects the ruling of the court and has no further comment at this time.
What it means: The ruling could affect clients in California who fail to pay life insurance premiums and end up in court.
The history: Siino bought a 20-year level-term policy with a $100,000 death benefit from Foresters Life, part of Toronto-based Foresters, in 2010.
In 2013, California adopted rules that require life insurers to give policyholders 60 days to pay missed premium payments; give policyholders a chance to designate a third party who should get notices about late premium payments and policy terminations; and send notices about unpaid premiums within 30 days of failing to get the payments.
Siino moved from the address the insurer had on file in 2014.
She failed to pay the premium that was due in January 2018. Forester sent her lapse notices. She learned that the policy had lapsed in 2019 and did not apply for reinstatement.
Later, Siino alleged in court that Foresters Life had violated California's designee notice requirement and the termination notice requirement.
Credit: Adobe Stock
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.