While researching a long-term care insurance issue the other day, I came across a decision revolving around another, unrelated issue that struck me as both disconcerting and blog worthy. Generally speaking, when you pay money for something, you expect to actually get that something in return, right? More specifically, when you pay an insurance premium for a particular type of insurance benefit or coverage, you expect such benefit or coverage to actually exist, right? Silly you, according to at least one insurance company. . . .

Currently pending in the United States District Court for the Southern District of Florida is a case involving a long-term care insurance carrier who was apparently happy to collect a premium from a policyholder no longer eligible to receive the benefit to which the premium related.1 In Gelfound, Mr. Gelfound paid MetLife an additional premium for an Annual 5% Benefit Inflator Rider pertaining to the $100/day confined care coverage available under his long-term care policy. The additional premium paid by Mr. Gelfound resulted in an annual 5% increase to his $100/day confined care coverage until he turned 86 years old, at which point the 5% annual increase was to cease. Fair enough, so long as Mr. Gelfound was not obliged to pay the additional premium past his 86th birthday, correct? Incorrect, according to MetLife.

MetLife continued to collect Mr. Gelfound’s additional premium beyond his 86th birthday until Mr. Gelfound discovered the “error” and sought MetLife’s refund of the premium payments he inadvertently made for non-existent benefit or coverage. In response to Mr. Gelfound’s refund request, MetLife told Mr. Gelfound to take a hike. So, Mr. Gelfound sued MetLife. MetLife’s justification for its counterintuitive, take a hike position? The policy did not explicitly provide for the automatic termination of additional premium payment upon the termination of the benefit to which the premium related (i.e., it was on 86-year-old Mr. Gelfound to specifically request termination of the additional premium payment upon the termination of the benefit to which the premium related) and MetLife’s premium rates were approved by the State of Florida.

Judge Marra denied MetLife’s motion to dismiss a couple weeks ago. It will be interesting to see how the Gelfound case pans out, but this blog was more precautionary in nature. Do not assume your premium dollars are actually being applied as intended or preserving an expected future benefit or coverage. Lest you wind up like Mr. Gelfound who paid money for nothing and was then given the cold shoulder by his insurance company, it is in your best interest to periodically double-check (maybe even triple-check) that you are not making premium payments to an insurance company just for the heck of it.

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1 Gelfound v. Metlife Ins. Co. of Connecticut, No. 13-80479-CIV, 2014 WL 584214 (S.D. Fla. Feb. 14, 2014).