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A lapsed policy results in no cover

Lapse of the policies

Alison held sickness disability, cancer aid and sickness hospital policies with her insurance company, Insure Me, for many years. Unfortunately, all 3 policies lapsed in 2011 because of non-payment of the premiums. Alison said she was not notified that the policies had lapsed, and then in October 2012 and several times after this she tried to reinstate the policies.


Sadly, Alison was diagnosed with thyroid cancer in April 2013.


Communication with Insure Me

Alison said that during a telephone conversation with Insure Me in April 2013 she was told that her policies would be reinstated to cover her from 3 months prior to the telephone conversation, that is, she was covered prior to her cancer diagnosis.


Alison said she had not changed address since she first took out the policies and argued that Insure Me had sent the lapse notices to an incorrect address. This was because some correspondence sent by Insure Me, (but still received by Alison), was addressed to a similar address in Australia.


Insure Me argued that Alison did not instruct it to reinstate the policies in October 2012. Insure Me also said that Alison reinstated her policies in May, not April 2013, and that she could not claim for benefits under the policies because the cancer was a pre-existing medical condition at that time (having been diagnosed in April 2013). Insure Me offered to refund the premium Alison had paid in May 2013, but would not cover Alison for her cancer.


Review of the lapse notices

We received copies of lapse notices sent to Alison’s correct address in 2011. In our view the lapse notices were clear that if the premiums were not paid within 14 working days after receipt of the notices the policies would lapse. The lapse notices also advised that Alison’s bank had claimed that the direct debit authority for her premium payments had been cancelled.


There was no evidence to suggest that Alison did not receive the lapse notices. In addition, the lapse notices made it clear that the policy was going to lapse if payment was not received, and that Alison’s bank had cancelled the direct debit. In our view Insure Me had followed the correct procedure when cancelling the policies for non-payment of the premium.


We also noted that even if Alison had not received the lapse notice for some reason, she had not noticed that premiums were not being deducted from her bank account for around a year. We found therefore that Alison had contributed to her misfortune.


The telephone conversations

We reviewed the telephone conversations between Alison, her carer Margaret (who assisted Alison with her complaint), and Insure Me. A telephone conversation between Margaret and Insure Me in October 2012 revealed that there was only a discussion about a previously declined and unrelated spinal claim being reviewed. There was no specific discussion about reinstatement of the policies.


We found that even if Alison or Margaret had instructed Insure Me to reinstate the policy in October 2012, the medical evidence indicated that Alison was already showing symptoms of the cancer at that time, meaning it could have been classed as a pre-existing medical condition. This would have resulted in there being no cover for Alison’s cancer condition in any event.


The issue with Alison’s address

We also noted that Insure Me wrote to Alison in early May 2013 after a telephone call. Insure Me addressed the letter to an address in Australia. The letter said that Insure Me would reinstate the policies upon receipt of the premium. Alison then sent a cheque back to Insure Me for the premium amount. This showed she received the letter addressed to an Australian address and supported Insure Me’s argument that it did in fact send the lapse notices in 2011 to the correct address for Alison, in New Zealand.


Although we sympathised with Alison’s unfortunate position and her poor health, we found there was insufficient evidence for us to find that she had reinstated her policies the complaint was not upheld.