A life insurance policy can be issued, premiums can be paid and years can pass before a dispute exposes a more basic question: did the insurance contract legally take effect in the first place?
That question was central in Trebell v. Canada Life Assurance Company, 2026 ONCA 481.
The insured applied for a $500,000 life insurance policy and paid the initial premium. Between the application and delivery of the policy, she experienced symptoms that led to medical investigation. Years later, after her death, Canada Life denied the beneficiary’s claim. The insurer relied on section 180 of Ontario’s Insurance Act, which provides that a life insurance contract does not take effect unless there has been no change in the insured person’s insurability between the application and delivery of the policy.
The beneficiary obtained summary judgment at first instance. The Court of Appeal allowed Canada Life’s appeal.
The appellate court treated the statutory requirement as a condition precedent to formation of the insurance contract. That was different from the rules governing contestability after a contract has taken effect. The two year contestability limitation therefore did not prevent the insurer from relying on the statutory formation requirement.
The Court also rejected the argument that the policy’s own incontestability language displaced the statute.
The result did not finally determine whether the insured’s health developments actually amounted to a change in insurability. The summary judgment was set aside so that factual issue could be litigated.
The case draws an important distinction between challenging an existing insurance contract and asking whether the statutory conditions for the contract to take effect were satisfied at all. That distinction can matter long after a policy was delivered.
For consumers and advisors, the decision also highlights the sensitive period between application and delivery. Material health developments during that interval can have consequences even where the original application was accurate when completed.
The appeal was allowed and the underlying insurability question remained for determination.