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Loan insurance - mortgage in joint names - husband died - wife attempted to activate insurance - claim declined - unknown to the wife, husband had cancelled the policy - policy owned by husband only - inappropriate for the bank to discuss cancellation of policy with wife at time of cancellation as she was not a party to the policy
In April 2005, Mr and Mrs M purchased a new home. Refinancing and new loan insurance were organised through their bank at the time of the purchase.
Sadly, in April 2007, Mr M was killed in an accident, leaving Mrs M with a young child and a housing loan to service. Shortly afterwards, Mrs M contacted their bank to claim on the loan insurance. She was advised that the insurance had been cancelled in accordance with Mr M’s instructions. Mrs M’s lawyer investigated and discovered that Mr M had contacted their personal banker and cancelled a life insurance policy and the loan insurance policy in August 2006. Mrs M was aware that Mr M had intended to cancel his life insurance policy because he was taking out a life insurance policy through a new employer. However, Mrs M was sure he had never intended to cancel the loan insurance. She further queried why the bank had cancelled the policy without requiring her signature or without at least confirming the cancellation with her.
Mrs M was not satisfied with the bank’s response to her queries, and brought her claim to me.
While Mrs M accepted that Mr M had cancelled his life insurance policy, she maintained that it did not make sense that Mr M would have cancelled the loan insurance. Mrs M’s name was added to the property title when Mr and Mrs M refinanced. Mrs M was sure that her name was added to the new loan insurance policy documents at that time.
The bank advised my investigator that Mr M was the sole policy owner of the loan insurance. Following further investigation, including obtaining a recording of a call that Mr M made to the bank about cancelling the policies, it became clear that Mr M had intended to cancel the loan insurance and had given clear instructions to the bank to cancel both policies. It seemed that Mr M thought the life insurance provided by his employer would be enough protection for his needs. The bank stated that, as Mrs M was not a party to the policies, it would have been inappropriate to discuss Mr M’s cancellation request with her.
Upon becoming aware of this further information, Mrs M contacted my office to say that she accepted that Mr M had intended to cancel the loan insurance, and did not wish to pursue matters further. Mrs M was insistent on conveying her heartfelt thanks to my investigator for all the work she had done. She said that without my investigator’s assistance she would not have been able to accept the situation.