North American Refuses to Pro-rate Refund Upon UL Cancellation?

jacobtn

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had a client who took a UL and paid for a year. She was using an RMD to fund it as a part of tax free planning, and was a good plan for her estate in my opinion. However, 6 months into it she decided she didn't want the coverage and wanted to cancel. We called the carrier and they said that while the surrender value was zero, if she sent in a surrender form a letter requesting a pro-rated refund they would consider her request.

Now they are saying that while her coverage is canceled, they will not refund her premium and she has no coverage and basically lost 6 months premium (about three grand).

Is this standard practice? I have my brokerage firm looking into it. I don't see how they can end her coverage without refunding her payment.
 
That sounds like unearned premium. Sounds like something is missing from this.

had a client who took a UL and paid for a year. She was using an RMD to fund it as a part of tax free planning, and was a good plan for her estate in my opinion. However, 6 months into it she decided she didn't want the coverage and wanted to cancel. We called the carrier and they said that while the surrender value was zero, if she sent in a surrender form a letter requesting a pro-rated refund they would consider her request.

Now they are saying that while her coverage is canceled, they will not refund her premium and she has no coverage and basically lost 6 months premium (about three grand).

Is this standard practice? I have my brokerage firm looking into it. I don't see how they can end her coverage without refunding her payment.
 
That sounds like unearned premium. Sounds like something is missing from this.

yes it is very odd. I have the brokerage talking to folks above the CSR level over there to figure out what is going on. Don't see how it's legal for them to just pocket her money.
 
I know that in NY, the laws do not require the carrier to return unearned premiums in a situation like that. The policy actually determines this...

Carriers often return unearned premiums but as a courtesy (or because it is written into their policy as a requirement), not as a matter of law.
 
If it's indeed a company rule/guideline/or whatever the reason, that prevents them from returning unearned premium, they should at least allow/suggest to the insured that they can let the policy continue and let it lapse at the end of the one-year period for non-payment reasons and not just cancel the coverage immediately.

But like Tahoe Ray said...many carriers may return unearned premiums for relations purposes - e.g. if you decide you want to get a new policy later on, you'll place your business with them again instead of another carrier.
 
While they are not obligated to refund premium, they are obligated to reinstate the policy, they can only choose one or the other.

If you want this resolved, send a letter certified mail to:

Steven Craig Palmitier
North American Company For Life and Health Insurance
525 West Van Buren
Chicago, IL 60607

Steven is the President of NACOLHA

Be clear in the letter that your next step would be to reach out to Esfandyar Dinshaw and John Craig the President and CEO (respectively) of Sammons if not resolved. I would send a letter yourself and have the client send a letter.

I've seen similar things take place at other companies, and most likely this is just some dweeb in customer service who could care less what happens being a moron.

Executive leadership is mortified to learn about these situations.
 
Thank you for this information. I will do that if I can't get a satisfactory resolution this coming week.

While they are not obligated to refund premium, they are obligated to reinstate the policy, they can only choose one or the other.

If you want this resolved, send a letter certified mail to:

Steven Craig Palmitier
North American Company For Life and Health Insurance
525 West Van Buren
Chicago, IL 60607

Steven is the President of NACOLHA

Be clear in the letter that your next step would be to reach out to Esfandyar Dinshaw and John Craig the President and CEO (respectively) of Sammons if not resolved. I would send a letter yourself and have the client send a letter.

I've seen similar things take place at other companies, and most likely this is just some dweeb in customer service who could care less what happens being a moron.

Executive leadership is mortified to learn about these situations.
 
Unearned premium on a UL? If surrender penalty exceeds gross cash value you're SOL...only chance would have been to change her mind in the free look period. Once it's applied, it's not coming back.
 
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