Transamerica’s Cancelation of 99-Year-Old’s Policy Draws National Attention
July 25, 2017 by Jay Cooper
When Gary Lebbin turns 100 this September, Transamerica could have a PR problem. When he hits the landmark birthday, a unit of the company that issued his life insurance plans to cancel two of Lebbin’s policies totaling $3.2 million in death benefits, The Wall Street Journal reports.
Other life insurers may face similar tough decisions, as a growing number of individuals hit the 100-year mark. A standard provision of many permanent life insurance policies terminates the death benefit and payout of all built-up savings when the policyholder reaches a certain age.
Since the mid- to late-2000s, life insurers have generally used 121 as the standard maturity age in new contracts, but there is an unknown quantity of contracts with the 100-year limit in policyholders’ hands, The Wall Street Journal article says.
The Journal reports that some insurers have previously given policyholders the chance to extend the age in their older policies, with varying financial terms. Lebbin’s insurer, which the article only describes as a unit of Transamerica, chose not to offer an extension. The company did say it would pay the built-up net cash value, per contractual terms, according to the article.
Lebbin’s family filed a suit in federal court in Maryland, claiming Transamerica knowingly used an age that was too low at the time of the policy’s sale in early 1992. The suit also claims Transamerica marketed the policy as life-long coverage. The lawsuit claims the Lebbins have paid more than $1.5 million in premiums, and seeks a revision to the contract to allow coverage until Lebbin’s death, the Journal reports.
In an emailed statement, Transamerica stood by its decision.
“We are aware of Mr. Lebbin’s lawsuit against Transamerica but have not yet filed a response. We understand that Mr. Lebbin is disappointed that his life insurance coverage will shortly come to an end. However, his policies, according to their terms, pay benefits only if he were to pass away before the policies’ anniversaries nearest age 100 (the contractual “maturity dates”). Otherwise, coverage ends and Transamerica pays the policies’ net cash values (if any) to the policies’ owners. Mr. Lebbin’s policies do not include a rider or other provision that would extend coverage past the maturity dates. At Transamerica, we take seriously our obligations to the millions of customers who rely on the solutions we provide and we abide fully by the terms and conditions of our policy contracts,” the statement says.
Lebbin was born in Berlin in 1917. He arrived in the U.S. 1938 to escape Nazi persecution, according to the Wall Street Journal article. Lebbin went on to start a paint-manufacturing business that eventually grew to 50 retail outlets in the Baltimore and Washington D.C. area.
Insurers are likely to face a dilemma similar to Transamerica’s more often. There are an estimated 53,364 centenarians in the U.S. as of 2010, the Journal reports. That’s up from 37,306 in 1990 and 32,194 in 1980.
