Lawsuit Claims Standard Life, Protective Life Violated Insurance Notice Requirements in California

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A proposed class action alleges Standard Life Insurance Company and Protective Life Insurance Company have unlawfully failed to send policyholders annual notice of their right to designate a third party to be notified of a potential termination of benefits due to non-payment of premiums.

The 20-page lawsuit states that two sections of the California Insurance Code require life insurance companies, prior to terminating a policy, to notify both the policyholder of their right to designate a third party to receive notice of the potential termination of the policy and each designee of any non-payment of a premium. Per the case, these requirements are designed to protect policyholders from losing insurance coverage due to a missed premium payment or being uninformed of their insurance options.

The case claims Standard Life and Protective Life have “repeatedly and intentionally” failed to send the requisite notice to policyholders and their designees. Because the proper notice was not sent, proposed class members’ policies “could not have and did not lapse,” meaning the defendants have unlawfully denied policyholders’ benefits claims, the lawsuit alleges.

According to the suit, Sections 10113.71 and 10113.72 of the California Insurance Code went into effect on January 1, 2013. The lawsuit relays that relevant case law, including a California Supreme Court decision in a suit in which Protective Life was named as a defendant, has established that the California Insurance Code’s provisions apply to all policies in force as of January 1, 2013.

The lawsuit charges, however, that the defendants have disregarded the statutes for every policy issued before January 1, 2013, even if the policies were renewed after that date.

“In other words, Defendants have set up two separate regulatory schemes to administer their life insurance policies,” the complaint alleges.

The lawsuit claims that because the defendants have failed to send proper notice of a policyholder’s right to designate a recipient for a potential termination notice, and subsequently send notice to that designee, the insurers have improperly terminated policies in violation of California law. Moreover, the defendants have breached their insurance contracts with customers by refusing to pay out death benefit proceeds to beneficiaries, the case says.

The plaintiff in the suit is the sole beneficiary of her late husband’s Standard Life insurance policy, the lawsuit relays. According to the case, the defendants attempted to lapse the policy for non-payment of premium in April 2014. The plaintiff claims the defendants failed to provide notice to her husband of his right to designate a recipient for notification of a pending termination and, by extension, failed to send notice to a third-party designee of the pending termination.

After the plaintiff’s husband’s death in January 2018, the plaintiff contacted Protective Life through counsel to submit a claim for benefits, the suit says. Nevertheless, the company refused to pay death benefits the plaintiff was “rightly owed,” according to the complaint.

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