GENERAL OVERVIEW OF SETTLEMENT
Eligibility to Participate
Class policies are participating life insurance policies that were issued by London Life in Canada between January 1, 1980 and December 31, 1995.
Class policies also include Econolife policies for which clients selected the Econolife dividend option on or before December 31, 1995.
The Equity series of participating life insurance policies, which was discontinued in 1982, is not included.
The settlement includes eligible owners of class policies that are currently in-force or have lapsed or surrendered on or after January 1, 1992. The settlement does not include policies for which the policy owner has released London Life from claims relating to matters at issue in the class actions.
In general, the actions relate to premium offset, policy values and income benefits for participating life insurance policies purchased from London Life from 1980 through 1995.
The settlement relates to life insurance policies purchased from London Life. Therefore, former Prudential of America clients whose policies were acquired by London Life in 1996 are not part of the settlement.
A newspaper notice was published in newspapers all across Canada on August 29, 2002 informing Former Owners about the settlement.
Former Owners are owners of policies that lapsed or were surrendered between January 1, 1992 and April 15, 2002.
The newspaper notice relates only to Former Owners and not to policyholders who have current in-force policies.
Policyholders who have current in-force policies will receive a direct mailing package from London Life.
To view the newspaper notice to Former Owners, click here.
Former Owners have a choice of benefits under the settlement:
New Policy Benefit
Policyholders can choose to purchase a new participating life insurance policy appropriate for the age of the person to be insured, subject to the standard underwriting requirements of London Life.
If approved, the new policy will provide insurance on the same person and in the same coverage amount as the lapsed or surrendered class policy or London Life’s current minimum coverage amount, if larger.
There will be a 50% reduction in the first annual premium for the new policy.
Individual Claims Review Process (ICRP)
Policyholders may participate in an adjudication process to resolve individual claims relating to premium offset, policy values or income benefits.
The adjudication process is conducted entirely in writing and includes a right to appeal to an independent adjudicator.
The claim review decision and the benefits received will depend on the types of claims made, the particular features of the policies involved, and the evidence available relating to the acquisition of the policies.
The stronger/better proof available, the better the relief that will be received.
Global Benefits are provided to policyholders automatically for each current class policy, unless the policyholder opts out.
Policyholders do not have to do anything at all to receive Global Benefits. Policyholders do not have to complete or return any form(s) to receive Global Benefits.
Global Benefits include:
An increase in the annual dividend on all current class policies (called a dividend enhancement) for one year; and
For Econolife policies, a reduction in the cost of the term insurance on that policy (which benefit has already been provided).
As a current owner of a participating life insurance policy, policyholders receive annual dividends on their policies, paid on the policy anniversary date.
Dividends vary from year to year and are not guaranteed.
The Global Benefits provide an increase, for one year, in the annual dividend otherwise payable on the basic insurance amount of the policy by using an interest rate that is one-half of one percent (50 basis points) higher than the interest rate that would otherwise apply.
London Life will have 180 days to begin providing this benefit once the mailing of all notices has been completed.
The dividend enhancement will be provided on the first policy anniversary date.
Reduction in Cost of Term Insurance
All class members who are current owners of an Econolife class policy have already received a five year reduction in the cost of the term insurance component of those policies.
This reduction started to apply in March, 1997.
A simple way to understand the Global Benefits is to consider an analogy to a bank account.
The dividend enhancement described above is similar to a bank agreeing to increase the interest it pays on your money for a period of one year. Instead of paying interest at 2% for that year, the interest rate is bumped-up/increased by ½ of 1% (50 basis points) so that the interest rate will be 2.5%.
The reduction in cost of term insurance is similar to a bank agreeing to reducing service charges/fees on a bank account.
Global Benefits have real value for policyholders, however, they do not result in policyholders receiving a payment, cheque or clearly-identifiable, tangible benefit from London Life.
The reductions in cost of term insurance have already been received by policyholders and the dividend enhancement will be received in due course and will add value to policies.
Global and Enhanced Benefits
In addition to Global Benefits, policyholders may either automatically qualify for Enhanced Benefits, or can apply for them.
Policyholders should check their Policy information statement on Page 2 of the mailing package booklet to find out whether or not they automatically qualify for Enhanced Benefits.
If policyholders automatically qualify, no forms need to be completed or returned.
If policyholders do not automatically qualify for Enhanced Benefits, information on how to apply for them, and who will be eligible, is set-out below under the Tips for Completing the Policyholder Election Form.
Enhanced Benefits include:
A dividend enhancement for two more years (two years beyond the one year Global Benefit enhancement described above).
A cap on reduced term purchase rates for Econolife policies.
A cap on the premium offset date for the policy based on London Life’s 2001 dividend scale.
Dividend Enhancement/Term Insurance Cost Reduction
The dividend enhancement and reduction in cost of term insurance is as set-out above under the Global Benefits section.
Cap on Premium Offset Date
What is most important under the Enhanced Benefits relief is that the premium offset date for the policy based on London Life’s 2001 dividend scale will be no more than 50% later than the premium offset date based on the dividend scale in place when the policy was issued, i.e., one and one-half times the premium offset date promised at point of sale of the policy.
For example, if the policy was originally illustrated to offset after eight years, based on the dividend scale in effect at that time, the premium offset date for the policy under the 2001 dividend scale would be capped so that it is no more than 12 years (8 years x 50% = 4 years / 8 years + 4 years = 12 years).
This is a significant and valuable benefit in that the offset date that is now faced by some policyholders prior to settlement benefits is in many cases much more than one and one-half times what was illustrated at point of sale.
The Enhanced Benefit brings the premium offset date back down and more in-line with what was promised at point of sale.
Individual Claims Review Process (ICRP)
Class Members can choose to participate in an adjudication process to resolve individual claims relating to premium offset, income benefits or cash values.
There are three types of individual claims:
Claims based on a representation of a guaranteed premium offset date — called premium offset claims.
Claims based on a representation of a guaranteed annual income for some period of time and, where applicable, a guaranteed premium offset date — called Pay Day claims.
Claims based on a representation of a guaranteed cash value at a specified point in time — called cash value claims.
Policyholders can make only one type of claim for each policy.
Claims can be based on a representation at the time of purchase of the policy or at the time of a change to the policy.
To make a claim, policyholders must choose the Individual Claims Review Process (Option 3) on the Election Form and mail it to London Life post-marked or delivered within 68 days of the date on the personalized covering letter.
London Life will send a claim adjudication package including the necessary forms and that documentation will have to be reviewed, completed and returned in order to participate in the ICRP.
Policyholders have 68 days from the date on the covering letter sending the claim adjudication package within which to complete the necessary forms, etc. and file the claim under the ICRP.
If a claim adjudication package is requested but not completed and returned to London Life within the required time, the policyholder will not be entitled to make a claim under the ICRP but will receive the Global Benefits and any Enhanced Benefits they automatically qualify for, as shown on the Policy Information Statement.
Policyholders may choose to opt out and exclude themselves from the settlement.
If policyholders opt out, they will not be entitled to receive any settlement benefits.
Policyholders are not able to pursue a lawsuit or make any other claim relating to the matters covered by the settlement unless they opt out.
If policyholders wish to opt out, they must choose that option on the Election Form and the form must be post-marked or delivered to London Life within 68 days of the date on the personalized covering letter.
We do not recommend that any policyholder opt out of the settlement unless they plan to specifically pursue a lawsuit or other claim relating to the matters covered by the settlement. Such litigation against London Life is risky and speculative and will involve significant cost and expense on the part of the policyholder.
Most lawyers taking on a claim such as this will require a significant up-front retainer fee and, other than in exceptional circumstances, will not be prepared to take such cases on a contingency or speculative basis nor will they be prepared to provide a definitive opinion on chances of success at trial.
Because of the risks and costs of litigation on an individual basis, we recommend that policyholders seriously consider receipt of benefits under the Settlement Agreement rather than pursuit of expensive and risky individual legal action against London Life.
If you would like more information regarding this claim or wish to be added to our database of claimants, you may e-mail us at firstname.lastname@example.org.
You can contact us directly by telephone at Scarfone Hawkins LLP at 1-905-523-1333.
You can contact us by fax at 1-905-523-5878.