Don't Delay When Claiming for Life Insurance Benefits

The recent decision in Dicaro Estate v. Manufactures Life Insurance Company considered an estate trustee's ability bring a claim for insurance proceeds more than ten years after the deceased's death.  

The deceased died in 1999 due to complications relating to liver disease and after undergoing a biopsy.  He had worked for Molson Breweries for almost 25 years and had various insurance policies issued by Manulife, the defendant in the proceeding. 

After the deceased’s death, his widow (who was the plaintiff in the action) applied for and received the basic benefit claim of $45,000.  On the proof of claim form filed, the plaintiff specified that the death was NOT accidental (and, accordingly, no accident/dismemberment benefits were paid). 

In 2000, the plaintiff commenced a medical malpractice claim against the hospital and medical practitioners involved in the deceased’s care at the time of his death.  The decision was released in 2003.  It was during that proceeding that the plaintiff later claimed she first learned that the deceased’s death was caused by an ‘accidental poke’ during the biopsy.  As a result, in 2007, the plaintiff filed a claim with the defendant for accident benefits.  In 2008, Manulife denied the claim due to lateness as well as non-compliance with the proof of claim provisions in the insurance contract. 

The plaintiff commenced an action against the defendant in 2010 seeking the accidental death benefits under the deceased’s various insurance policies.  The defendant then moved for summary judgment seeking to have the plaintiff’s claim dismissed arguing that there was no genuine issue for trial. 

Justice Chapnik considered the various limitation periods that could possibly apply – under the policy itself as well as (the now revoked) s. 206(1) of the Insurance Act and s. 34(5) of the Limitations Act.  She found that no matter what permutation of the limitation periods was applied, the plaintiff was clearly out of time for bringing the claim. 

The plaintiff also relied on s. 96(1) of the Courts of Justice Act, arguing that principles of fairness and equity should be applied in the circumstances.  However, Chapnik J. found that this would not be appropriate in the given case given the plaintiff’s non-compliance with limitations imposed by statute. 

Accordingly, she granted the defendant’s motion for summary judgment and dismissed the plaintiff’s claim.    

Will CPP Changes Affect When You Retire?

As some might be aware, changes to the Canada Pension Plan (“CPP”) were introduced earlier this year.  Those changes might have an impact on the decision some people make as to when to retire. 

One of the biggest changes that have been implemented is that an individual’s monthly CPP payment will be reduced by a larger percentage if he starts receiving payments before the age of 65.  Before the changes, CPP payments were reduced by 0.5% for every month before age 65 that they were received (meaning, if someone started receiving CPP at age 60, payments would be reduced by 30%). 

However, with the changes, the reduction will be greater.  By 2016, it will be 0.6% for each month an individual receives CPP before reaching 65 (meaning, if someone starts receiving CPP at 60, payments would be reduced by 36%). 

In addition, the increase in payments received for taking CPP after the age of 65 will be higher.  Prior to the changes, an individual’s payments would increase by 0.5% for each month after 65 (up to age 70) that the individual delayed receiving payments.  However, with the changes the increase will rise to 0.7% per month by 2013. 

This presents the dilemma of when is it best to start taking CPP.  As discussed in a recent article in the Globe & Mail, if an individual retires before the age of 65 and needs the money, then there is no point delaying in the hopes of receiving higher payments later. 

For those with more flexibility in determining when to start receiving payments, the decision is more nuanced – market considerations can play an important role.  Some decide to take the payments early hoping that interest earned by investing the money will compensate for the reduced level of payments. 

Of course, there are also other considerations – such as what sources of retirement income an individual (and his or her spouse) has as well as an individual’s tax situation.  It is important to remember that retirement planning involves more than just CPP!