A proposed class action lawsuit alleges Transamerica Life Insurance Company has refused to comply with California law governing the lapse and termination of life insurance policies.
In particular, the 31-page case alleges Transamerica has “systematically and purposely” allowed policyholders’ life insurance benefits to lapse due to its failure to provide proper notice of pending lapses or terminations, mandatory 60-day grace periods following missed premium payments, and annual notice that policyholders may designate a third party to receive “critical notices and information” regarding their policy.
“Ultimately, Defendant has robbed thousands of their customers and beneficiaries of the investment in such policies, policy benefits as well as the security intended to be provided from such insurance,” the suit says.
The plaintiff, a beneficiary of her mother’s Transamerica life insurance policy, claims her mother faithfully paid her monthly premiums for nearly 30 years before missing a payment in June 2018. According to the case, which rings similar to a suit filed earlier this month against John Hancock, the plaintiff’s mother was ill at the time and died two months later, in August 2018.
After submitting a claim in connection with her mother’s policy, the plaintiff was allegedly told that the claim was denied due to a lapse in coverage for nonpayment of premium. The plaintiff says she has no record of ever receiving notice from Transamerica of any missed premium payments, nor with regard to any impending lapse in coverage. Further, the suit alleges the defendant failed to provide notice of the 60-day grace period following the missed premium payment and never informed the plaintiff or her mother of the latter’s right to designate an additional party to receive notices.
The lawsuit claims Transamerica has intentionally failed to provide statutory notices and grace periods to policyholders, beneficiaries and assignees in order to avoid paying out owed life insurance benefits since January 1, 2013. The company’s conduct, the case goes on to allege, is especially egregious given many of the proposed class members are seniors. According to the suit, the sections of California’s Insurance Code relating to insurance notice requirements are intended to protect “the elderly and ill” from unintended forfeitures of life insurance policies.
The plaintiff claims that despite the defendant’s “lack of strict compliance” with California law, the company has yet to pay her the benefits owed under her mother’s policy, which the case argues was still in “full effect” upon the woman’s death.
The lawsuit seeks to cover the following class:
“All past, present, and future owners or beneficiaries of Defendant’s individual life insurance policies in force on or after January 1, 2013 and governed by Sections 10113.71 and/or 10113.72, where the policies underwent or will undergo lapse, termination, and/or reinstatement without Defendant first providing written notice of and an actual 60-day grace period, a 30-day notice of pending lapse and termination, and/or an annual notice of a right to designate at least one other person to receive notice of lapse or termination of a policy for nonpayment of premium.”
The case also proposes a sub-class of those who were 65 years of age or older when their policy lapsed or was terminated.