Lawsuit Claims General American, MetLife Prematurely Terminate Life Insurance Policies

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General American Life Insurance Company has been named in a proposed class action in which a woman claims her deceased husband’s life insurance policy was unlawfully terminated. The case claims General American and co-defendants Metropolitan Tower Life Insurance Company and Metlife Group, Inc. allow policies to lapse or terminate without adhering to strict provisions set by the California Insurance Code regarding missed premium payments.

According to the suit, if a policyholder fails to make a premium payment against his or her life insurance policy, the defendants are prohibited by law from allowing the policy to lapse or terminate without complying with several requirements. Namely:

• The insurance company must provide a 60-day grace period during which the policy will remain in effect;
• A 30-day notice of lapse or termination must be mailed to the policyholder, as well as any individual who has been designated as a recipient of such notice and “any person having any interest in the policy”; and
• The insurance agency must notify the policyholder on an annual basis of his or her right to designate another individual or individuals as notice recipients.

The plaintiff says her husband purportedly missed a quarterly premium payment in January 2016. According to the lawsuit, the defendants terminated the man’s policy in February 2016, only halfway through the mandatory 60-day grace period. In March 2016, the case goes on, the defendants mailed a letter to the plaintiff’s husband advising him that his insurance policy had lapsed and requiring him to submit an Application for Reinstatement should he wish to reinstate the policy. The insurance company then denied the new application, according to the complaint, claiming the policy “no longer includes a reinstatement provision.”

The plaintiff’s husband died approximately two months later, the case says, and the defendants supposedly refused to honor the woman’s claim for benefits.

The lawsuit argues that the defendants “systematically and purposely” fail to adhere to California law concerning lapsed or terminated policies and thereby rob policyholders the insurance benefits to which they are entitled.