The Supreme Court of Canada (SCC) has decided not to hear a further appeal of a ruling that ordered insurance company ivari to pay out a $1.3-million life insurance policy.
In the case, ivari denied a death benefit claim from a woman who decided to covert the term life policy on her estranged husband into a universal life policy — but then cancelled the switch during the policy’s 10-day cancellation period after her husband unexpectedly died. She also sought to collect the payout under the original policy.
Switching to a universal life policy would have lowered the premiums but reduced the death benefit to $400,000.
The insurer denied her claim, the Supreme Court stated, “arguing that the cancellation period expired when [the insured] passed away, and that cancelling the universal life policy did not revive the original policy.”
However, a 2022 decision by the Court of King’s Bench of Alberta sided with the beneficiary, ruling she had the right to cancel her decision to convert the policy into a universal life policy after her husband died. That decision also said the cancellation reactivated the original coverage, entitling her to the $1.3-million payout plus interest.
On appeal, ivari argued the cancellation clause should not be interpreted literally, and that “it would be inconsistent with the overall objective of life insurance” to allow her to switch coverage after her husband died and his lifespan was no longer uncertain.
“Thus, [ivari] argues, the death of the insured must terminate the right to cancel the policy within 10 days of its issuance,” the Court of Appeal of Alberta noted.
The appeal court rejected that argument and upheld the lower court’s decision, saying, “We agree with the trial judge’s conclusion that the respondent was entitled to exercise the 10-day cancellation provision to cancel the converted policy and claim the benefits under the term policy.”
The insurer then sought leave to appeal the decision to the Supreme Court, and the Canadian Life and Health Insurance Association (CLHIA) petitioned for intervener status in the case.
However, the Supreme Court dismissed both the CLHIA’s motion to intervene and the insurer’s application for leave to appeal.