Banking Case Study

You are on: The Problem

From the Perspective of the Client

A couple used RBC® to obtain financing for an automobile, and applied for life insurance coverage on the loan. They were both approved, and premium payments were collected over two years. When the husband passed away, his wife submitted a claim on the policy, only to find out the claim could not be paid because the husband had turned 70 before his death, and was no longer covered.

From the Perspective of RBC

The age restriction is specified in the loan insurance applications, however, the branch did not send a letter telling the client his coverage would end when he turned 70.

You are on: The Resolution

The Office of the Ombudsman Reports:

"RBC agreed that having coverage terminate due to an age restriction could be confusing. To show goodwill, the branch offered to reimburse the premiums collected and make premium payments for the wife for the rest of loan term, which she accepted."

You are on: What Can be Learned

For RBC:

Urge clients to carefully read all loan documents, including insurance applications or policies that are related.

Based on the ombudsman's recommendation, RBC has enhanced their system so coverage termination letters are automatically sent to clients.

For Clients:

Make sure you review all loan and related documents thoroughly, and don’t hesitate to ask questions if the information is not clear to you.