Grieving Widower Says Life Insurance Provider Shorted Him $100,000

As he reminisces with his daughter Nora, Peter Smith describes Nora's mother as always caring -- and sometimes feisty.

"She was a force of nature," Peter said.  "A short bowl of energy."

In March 2017, Debbi Goodman Smith fell in a store parking lot.  She succumbed to her injuries a short time later.  Her death at age 72 stunned her husband of 36 years.

"It was something I vaguely considered could conceivably happen about 20 years from now," Peter said.

Fortunately, the Smiths had accidental death and dismemberment insurance with Cigna.  It included $1,000 in basic coverage, plus additional coverage for which they paid extra.

"I signed up for $200,000 of coverage for each of us," Peter said.

It wasn't a fortune, but it would be enough for the surviving spouse to pay off the mortgage.  That's what Peter planned to do with the $200,000 after Debbi's unexpected death.

When he filed a claim, Peter learned the benefits were cut -- by 50 percent.

"Half of what I paid for," Peter said.

Cigna paid $100,000 of the $200,000 Peter expected.  So, he immediately reviewed his paperwork.

Peter said the enrollment form is clear to him.  "It says, 'Additional coverage, $200,000,'" he said.

Why did Peter get just half?

Cigna told Peter insurance benefits are customarily cut in half when the covered party reaches age 70.  An insurance trade group verified this for NBC Bay Area.

But Debbi was already 70 when they applied.  The computerized enrollment form included her date of birth, but it didn't calculate the reduction.  Despite the front page stating $200,000 in coverage, a line a few pages into the policy meant Cigna never would have paid the Smiths $200,000, because of their age.

Peter and Debbi Smith's daughter, Nora, asked NBC Bay Area for help.  At first, Cigna did not respond to our request for comment, so we suggested the Smiths file a complaint with the California Department of Insurance.  They did, and Cigna told the State it did nothing wrong.

The Department of Insurance agreed with Cigna.

"It looks like they didn't challenge the insurance company at all," Nora said.

NBC Bay Area obtained the 160-page file Cigna sent the California Department of Insurance.  It states the Smiths' enrollment form includes bold text that lays out the 50 percent reduction.  As evidence, Cigna said it put a print-out of the disclaimer in the packet. 

That disclaimer wasn't in the file we reviewed.  The state apparently didn't notice the key evidence was missing, and signed off on Cigna's denial.

"For both of them, I want to say, shame on you," Nora said.  "Particularly the Insurance Commissioner's office.  I feel like their role is really to protect the consumer, and I don't feel protected.  I feel very taken advantage of."

NBC Bay Area pointed out the missing evidence, and asked the State to reconsider its seemingly incomplete review.  Nora, too, is demanding a second look.

"My mom wouldn't stand for this," Nora said.

Peter is also unrelenting, but he concedes a wider range of emotion, on top of the grief of losing his wife.

"[I feel] very helpless, very angry, and very anxious to warn everyone else to watch out for their insurance companies," he said.

That warning applies to any kind of insurance policy -- life, health, auto, property, and other coverage.  Consumers should always carefully read the entire policy before buying, and ask questions of a broker or agent before signing anything.

Shortly before we published this story, Cigna responded to our inquiries.  It declined to take our questions.  Instead, it sent us two statements, which are below, in full:

We have resent the policy certificate to Mr. Smith to help eliminate any remaining confusion about benefit amounts.  While privacy laws preclude me from sharing information about any individual policyholder, I think your viewers might find the following information helpful.

To help keep group insurance policies affordable for all participants, it is common for accidental death policies covering membership groups (for example, bank customers, etc.) to adjust benefit levels over the life of a policy. For instance, a policy might automatically reduce benefit amounts at 70 years-old. This benefit reduction is clearly mentioned in the enrollment materials as well as in the policy certificates. We encourage individuals who are interested in coverage to read all related materials before signing up, review their policies to confirm available benefits, and contact us at any time if they have questions.

- Cigna spokesperson

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We sympathize with Mr. Smith’s loss. Our policies do provide benefits in such instances, and we have paid the full benefit amount due under the terms of this policy.

As I previously mentioned, to help keep group insurance policies affordable for all participants, it is common for accidental death policies covering membership groups (for example, bank customers, etc.) to adjust benefit levels over the life of a policy. For instance, a policy might automatically reduce benefit amounts at 70-years-old. Such benefit reductions are clearly mentioned in the enrollment materials as well as in the policy certificates, and we are obligated to administer the policies as written. We encourage individuals who are interested in coverage to read all related materials before signing up, review their policies to confirm available benefits, and contact us at any time if they have questions.

- Cigna spokesperson