Executive Summary: Key Legal and Evidentiary Issues

• Canada Life denied a life insurance claim based on a claimed change in the insured’s health status between application and policy delivery.

• The court ruled that s. 180(1)(c) of the Insurance Act cannot be used indefinitely to void coverage for unknown or latent conditions.

• A literal interpretation of s. 180(1)(c) was rejected as it would create pervasive uncertainty in life insurance contracts.

• The court held that the two-year incontestability clause under s. 184(2) set a rational outer limit for contesting insurability.

• Canada Life’s reliance on posthumous medical record analysis was found insufficient to raise a triable issue.

• Summary judgment was granted in favour of the beneficiary, affirming that the policy was in effect at the time of death.

Background and policy history

Elizabeth Trebell applied for a life insurance policy with London Life (now Canada Life) on July 8, 2014, naming her ex-husband Scott Trebell as beneficiary on behalf of their children, pursuant to a separation agreement. At the time of her application, she had recently undergone a physical examination that reported no health concerns. Unbeknownst to her, she was likely developing colon cancer. The policy was delivered to her via her insurance agent on September 24, 2014. A few weeks earlier, she had begun to experience rectal bleeding and bowel pain, symptoms that eventually led to a cancer diagnosis following a colonoscopy in December. She died of colon cancer in 2018.

Claim denial and litigation

Following her death, Scott Trebell submitted a claim for the policy’s $500,000 benefit. Canada Life denied the claim, asserting that the insurance policy had never come into effect because there had been a “change in insurability” between the application date and the policy delivery—based on s. 180(1)(c) of Ontario’s Insurance Act. Canada Life claimed that, had they known about the symptoms, they would have postponed issuing the policy until the diagnostic results were available. Instead, they refunded the premiums.

Scott Trebell filed an action, asserting that the policy was in force at the time of death, and moved for summary judgment. Canada Life argued that s. 180(1)(c) created a condition precedent for the policy to take effect and that there was a triable issue.

Interpretation of statutory provisions

Justice Akazaki carefully examined the interplay between s. 180(1)(c), which states that a policy does not take effect if there is a change in insurability before delivery, and s. 184(2), which bars insurers from voiding policies for non-disclosure after two years, absent fraud. The judge concluded that s. 180(1)(c) was never intended to be a perpetual escape hatch for insurers. Interpreting it that way would undermine the purpose of life insurance—to provide certainty and financial security after death—and contradict the structure of the Insurance Act, which logically progresses from application to finality of coverage.

The court found that Canada Life’s interpretation would allow indefinite posthumous reviews of the insured’s medical history, even when there was no indication of known illness during the application process. This would defeat the expectation that insurance provides protection once the premium is paid and the policy is delivered.

Ruling on evidentiary issues and expert opinion

Canada Life submitted an affidavit from its medical director stating that the company would have postponed the policy had it known about the symptoms. The court accepted the affidavit but found that it did not raise a triable issue. The policy had been in effect for more than two years, and there was no evidence of fraud or misrepresentation. The court emphasized that relying on a medical director’s retrospective opinion was insufficient to overturn clear statutory protections after the incontestability period.

Conclusion

Justice Akazaki granted summary judgment in favour of Scott Trebell, declaring that the policy was valid and in effect at the time of Elizabeth Trebell’s death. The decision reinforces the principle that life insurance contracts must provide certainty, and it limits insurers’ ability to deny claims based on undetected or latent health issues that surface only after death. The ruling affirms that the statutory two-year contestability period under the Insurance Act provides a fair and reasonable boundary to challenge coverage.