Canada Life denies claim as policy holder died as ‘a result of criminal activity’
Under what circumstances would a life insurance claim be denied by a provider? It’s a complex question with many different answers, and one brought to prominence after a report by CBC News this week. On Monday, the national broadcaster detailed the case of Kevin Valentyne, a convicted drug dealer in Vancouver.
Valentyne has been missing and presumed dead for the past four years, but last week his mother was denied her life insurance claim by the Canada Life Assurance Company. The provider argues that Valentyne’s presumed death was the result of his involvement in criminal activity. According to the CBC report, he was last seen entering a home associated with the two lower-level dealers in East Vancouver, and was never heard from again. He was subsequently declared missing and presumed dead in 2014, with his mother being named the main beneficiary of his estate.
Prior to the incident, Valentyne had purchased a life insurance policy tied to his $415,000 mortgage on a condo in the city. As is standard in policies of this type, the plan included an exclusion clause that stated the provider wouldn't pay if the policy holder died while committing a crime, or as a result of criminal activity.
The exclusion clause is the primary reason Canada Life denied Valentyne’s mother’s claim, who responded by suing the firm, arguing that there was a lack of evidence regarding her son’s disappearance.
The B.C. Supreme Court thought otherwise, dismissing her lawsuit last Thursday.
According to Wendy Hope of the life and health insurance industry body, CLHIA, it’s common for providers to insert such exclusion clauses in life insurance plans.
“Many policies will exclude coverage if the insured dies during the commission of a criminal offence for either the life insurance or accidental death coverage,” she says. “The crime must generally be an indictable offence, which is codified in Quebec.”While the beneficiary in the Valentyne case (his mother) had nothing to do with his presumed murder, insurers make sure to remove any incentive to commit such a crime and receive a payout.
“In a case where the beneficiary under the policy murders the insured, they cannot benefit and the courts will not enforce the contract for that beneficiary,” explains Hope. “But the benefit may still go to another beneficiary or to the estate (provided the guilty party does not benefit).”
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