trying to cancel life insurance for lack of payment
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trying to cancel life insurance for lack of payment
Veteran’s life insurance notified us of a policy increase and I have always had
the payment automatically deducted from our bank account. I changed to the new
amount to be deducted but now have noticed that after that first correct payment
the bank then went back to the previous payment amount. So, we have been paying
the premium just the wrong amount the difference is 20. Now they want to
terminate our policy for failure to make timely payments. We did make timely
payments, just the wrong amount for I think for 5 months. They have offered to
reinstate us but we have to pay a penalty. My question is since we did make
payments, although it was the wrong amount, can they terminate our policy?
Joyce Previte
Asked on February 25, 2016 under Insurance Law, Montana
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 8 years ago | Contributor
Yes, they can terminate your policy. Paying the wrong amount--too little--is the same thing legally as not paying at all; your are legally obligated to make full payments on time. If you have to pay a reinstatement pentalty, if you can show that the error was your bank's (i.e. that you gave the correct instructions and they changed back to the old amount incorrectly), the bank should pay the penalty, since they were at fault; if they won't do so voluntarily, you could sue them (e.g. in small claims court) for the money.
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