Sunday Times 29/12/2013
Q. HH writes: As executor for my brother, who died this summer after a long battle with cancer, I found a term assurance policy among his papers. He had been paying the premiums for 21 years and the sum assured was €250,000, payable on death, but the policy had lapsed a couple of years earlier because of non-payment of premiums, and so was worthless. My brother had lost his home and business during his illness and his wife had left him. The hospice had tried to help with his paperwork and his bank accounts were closed. I accept the insurance company probably wrote to him at the time, but because he had moved, he had not been made aware of the situation. Another insurance company, with which he had pensions policies, had succeeded in tracing him down. Surely insurance companies should make every possible effort to contact people when they cease paying premiums on a potentially valuable policy?
A. A policy document would clearly state that the responsibility for paying the premiums lies with the owner.
Generally if you don’t pay your premium on time the insurer will write out to you at the address they have on their records. This 30 day period of grace gives a customer an opportunity to pay before the policy goes off cover. Remember it is the customers obligation to inform the insurer of a change of address, but if An Post returns post undelivered then the insurer may try to contact the customer by phone although they have no obligation to do so.
If a policy lapses because of unpaid premiums then, under the policy terms and conditions, a claim on that policy will not be paid. However, if the insurer is contacted by the policyholder (or their partner / family member) within a 3 month period from the date of the first unpaid premium, then they would reinstate the policy on payment of all arrears, even if the life insured had died during that period. The insurer reserves the right to charge a small fee.
The above does not apply where the insured has written to the insurer to cancel their policy.
Readers technical question answered by John Geraghty of LABrokers.ie