Policy Lapse

Samuel Weiss as Trustee of the Agi Weiss Insurance Trust v. John Hancock Life Insurance Company of New York, Index No. 035397/2014 (N.Y. Sup. Ct., Rockland Cty, Feb. 14, 2019)

In this case, the owner of an $8 million life insurance policy brought a declaratory judgment action seeking to put the policy back in force after the policy had lapsed. The policy entered default in October 2013 when it was determined that there were insufficient funds in the policy’s value to keep the policy in force. As a result, pursuant to the terms of the policy and New York law, the policy entered a 61-day grace period. The plaintiff, a trust, admitted that it received a lapse warning notice informing it that the policy was in default and that a default payment was due to avoid the termination of the policy.

During a two-day bench trial, the plaintiff’s employee testified that she reviewed the warning notice and understood it and that she had filled out a check for the default amount and made it payable to John Hancock. The employee then admitted that she filled out a FedEx label addressed to a different insurance company, Mass Mutual. The next day, she received a delivery confirmation email from FedEx, but she did not read it. Instead, the employee called John Hancock’s service center and spoke to service representatives to confirm John Hancock received the default payment. Despite being told numerous times that they had not received the default payment, plaintiff’s employee never actually read the FedEx confirmation that would have informed her that the check had been delivered to Mass Mutual.

The court dismissed all claims against John Hancock, finding that plaintiff had failed to show the elements of equitable estoppel and that John Hancock had not waived the contractual limitations under the policy.

Mound Cotton represented John Hancock Life Insurance Company of New York.


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