Replacing life insurance has ramifications. In a recent Third
Circuit case, the ramifications resulted in the loss of full policy
benefits.
In Lomma v. Ohio Nat'l Life Ass.
Corp., No. 18-2675, 2019 U.S. App. LEXIS 30151 (3d Cir.
Oct. 8, 2019), the insured had a universal life insurance policy in
effect since 1986. In August 2007, she applied with the same
insurer to replace the universal policy with a term life policy.
The insurer advised her that by replacing her existing policy her
suicide coverage may change.
The replacement policy included a suicide exclusion, providing
that if the insured killed herself within the first two
"contract years," the death benefits would be limited to
a return of the premiums paid. In May 2009, the insured committed
suicide and the insurer determined that the beneficiaries were
entitled to a refund of the premiums only.
