Woman's life insurance policy cancelled over $112 shortfall she didn't know about

A Chicago woman says a life insurance policy she paid into for 25 years was cancelled over a $112 shortfall that she never knew existed, and now, at 82 years old, she's uninsurable.

After CBS News Chicago got involved, the life insurance company reversed course and told this woman her policy could be reinstated, but it came with a hefty fee the company has not yet explained.

Dolly Janowiak took out a $100,000 life insurance policy more than two decades ago with her family in mind.

"I wanted to make sure my kids were taken care of if something happens to me," she said.

That is is why a letter from her insurer, Transamerica, postmarked April 25 brought her to tears. It said there had been a lapse in her payments and her policy had expired.

"What about all the money that I spent on it?" Dolly said.

Dolly's son, Greg, couldn't make sense of it, because their bank statements showed that she'd auto-paid the premiums every month.

"This woman has paid you religiously every single month for 20-plus years," Greg said.

A representative on the phone explained that the premium had gone up by $56 a month in March, so she was short.

"We never received anything to tell us that that was what the change was going to be," Greg said.

Transamerica told the family the notice was sent in the mail, but they never got it.

The Illinois Department of Insurance said snail mail is an acceptable form of notification — and certified mail is not required under state law.

The family asked what it would take to reinstate the policy. They were told she's now uninsurable.

"My mom has more health problems now than she ever had before. She's 82. Of course she does," Greg said. "Close to the end of the race, we're going to trip you up, and we're going to take that safety net away from you, and now your family's on their own, they're out in the cold."

The company declined to comment on the specifics of Dolly's case.

"Due to customer confidentiality, Transamerica does not discuss individual policy owner matters with third parties. We have reached out directly to resolve their concerns," Transamerica said in a statement.

But shortly after Transamerica's statement to CBS News Chicago, Dolly got a letter changing course, saying a reinstatement was now possible, but with a fee of $1,581.

The family said they're overjoyed to have the policy back, but have not gotten a straight answer about why they have to pay that much.

"I want other people to be aware of what this is all about, and how it affects a family," Greg said.

A spokesperson for Transamerica refused to discuss the fee. The family also hasn't gotten an answer, but they paid it in protest.

According to state law, there is a limit on interest charged for past due premiums, but there are no limits for the amount an insurer can charge to reinstate.