Because of mistake on a check, elderly woman loses her insurance

If you’re going to make a mistake when writing a check, don’t make it in the part where you write out the words, and don’t make it with an insurance company. They’re ruthless.

Just ask Madeleine Maldonado, of Concord, Mass., who sent AIG a check for $3,399.91, the premium for her long-term care insurance, the Boston Globe says today.

She wrote in the correct amount in the box for numbers, but she wrote out “three thousand three hundred and 99/100 dollars.” She was short $98.92.

The rules governing everyday business and banking transactions say if a check contains contradictory terms, words prevail over numbers, the Globe’s Sean Murphy writes.

With normal people, the mistake would be understandable, a phone call or message would be exchanged, and the difference would be submitted. But insurance companies aren’t normal people, so AIG canceled the 81-year-old woman’s insurance.

If you have long-term care insurance, your insurer hopes you drop dead of a heart attack or in a horrible, split-second accident. Just so long as it doesn’t have to pay while you linger in an expensive nursing home. It’s nothing personal. It’s a business calculation shared by AIG, one of the world’s largest and most notorious insurers. (See: financial crisis of 2008, $100 billion-plus bailout of AIG.)

Long-term care insurance has become a big loser for insurers. As the Globe’s Deirdre Fernandes recently reported, insurers badly miscalculated when they predicted the number of people likely to need nursing home care, versus the number likely to die before filing a claim. It’s a numbers game.

Carey Peabody, Maldonado’s daughter, appealed to AIG to accept a late payment and reinstate the policy. But instead of focusing on Maldonado’s obvious intent, AIG pointed to Maldonado’s failure to respond to an invoice for the past-due $98.92 or to a later notice of termination.

Peabody said her mother missed or misunderstood them. She said she doesn’t know if AIG refunded any portion of her mother’s premium. My thought: A rational person does not shell out thousands for a policy and then let it go, at her age, for lack of less than $100 — about the cost of one hour of nursing home care.

For a year, the woman’s daughter fought with the giant insurance conglomerate. No luck.

Maldonado now has dementia and no long-term-care insurance.