A life insurance company that was endorsed by the Northwestern Alumni Association will cancel on Feb. 1 a plan that includes 200 NU graduates – a move that one alumnus said could leave some policy holders without life insurance.
Bradley Hennenfent, Weinberg ’84, who has been treated for a brain tumor, filed a complaint with the Illinois Department of Insurance in November against Connecticut-based Hartford Life Insurance Co. for failing to inform him that the company could terminate his $50,000 policy when he enrolled in it in 1995.
“Insurance really is a scam,” said Hennenfent, 43, of Smithshire, Ill., who holds another life insurance policy. “The things they can do and the loopholes — it’s unbelievable. I figured if NU looked into it and said it’s a good plan, it would be a good plan.”
Many universities use such “affinity” programs with outside corporations to provide services for alumni at a lower cost in return for a cut of the profits, Stembridge said.
Participating in such programs often appeals to college graduates because they pay lower rates as a group.
About 3,400 college graduates nationally held Hartford life insurance policies endorsed by their alumni associations and also being ended Feb. 1.
A spokesman for Hartford, which was established in 1810, said that the company’s contract with the alumni association allowed it to end NU’s 200 policies, which are among the 3,441 total policies to be canceled.
Policy holders paid for and received coverage for each term, but the company was losing money from the policies, spokeswoman Kristin Flyntz said.
“Hartford … has the right to terminate the contract if it is appropriate to do so,” Flyntz said. “That’s the terms of the contract.”
The company took over the policy that included NU’s alumni association from Continental Assurance Company on Jan. 1, 2000, with the stipulation that the company could change the policy in 2002, Flyntz said.
Cathy Stembridge, director of alumni relations, said she was disappointed with Hartford’s move to cancel the policies. Hennenfent does not blame the alumni association in the complaint.
“We’re extremely unhappy with the decision,” Stembridge said. “(But) some things are not within our control, and the decision of a corporation like Hartford is not within my control.”
NU’s legal department signs off on all affinity programs, including the alumni association’s endorsement of the life insurance policy. The association also sponsors a program that provides free health insurance for graduating seniors, Stembridge said.
Stembridge said she was heartened by the fact that Hartford will offer two options to those who will lose their insurance: They can reapply for a term life policy of up to $50,000, underwritten by The United States Life Insurance Company, or convert to a $10,000 policy with Hartford.
But Hennenfent said those options hardly compare to the original policy, which did not require individuals to undergo medical exams or provide a medical history to receive coverage.
Group plans generally have lower rates, however, and often don’t require a medical exam. Such plans are often attractive to customers with a history of illness who would have difficulty gaining approval from United States Life, which requires a medical exam.
Hennenfent, who received treatment for his tumor in 2000, would probably not even have his application looked at by an insurance company, said Janet Catalano, a customer service representative with Seabury & Smith, the company that ran the life insurance policy program for Hartford.
Catalano said Hartford’s move to cancel the policies was a simple business decision.
“This was not done without fighting tooth and nail, but this was the agreement,” Catalano said. “Obviously no company likes to cancel business. They’re in the business to make money.”
A downside to group plans is that the insurance company can terminate them, said Chuck Budinger, the Illinois Department of Insurance’s supervising insurance analyst.
While he would not comment on Hennenfent’s case, Budinger said the department would investigate whether policy holders were adequately informed of the plan’s details or whether Hartford violated the contract. In the meantime, Hennenfent said he will try both Hartford’s options, so long as the policies cannot be canceled.
“This time I’ll show it to an attorney and look at it much more closely,” he said.
