Insurance – Cost-of-living adjustment – Disability income policy

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Where a defendant insurance company issued a disability income policy to the plaintiff, a judgment in favor of the plaintiff should be reversed because the policy language establishes that the cost-of-living adjustment increases stop on the policy anniversary after an insured has turned 65.

“Defendant Unum Life Insurance Company of America (Unum Life) issued a disability income policy to the plaintiff, Maryanne Bombaugh, in 1992 and has paid benefits to her under the terms of that policy since 2008. Following a dispute over whether Unum Life had to increase the amount of Bombaugh’s benefits annually after she turned sixty-five years old, Bombaugh brought suit against Unum Life and its parent company, Unum Group. On cross motions for summary judgment, a Superior Court judge concluded that the policy language was ambiguous and construed it in Bombaugh’s favor. Judgment entered for Bombaugh for breach of contract. Unum Life and Unum Group appeal. We reverse. …

“Unum Life argues that, under the terms of the policy including all the riders, Bombaugh’s maximum disability benefit effectively froze on the policy anniversary after she turned sixty-five years old. Unum Life does not dispute that Bombaugh’s maximum disability benefit continues to include the cost-of-living adjustment increases that accrued prior to her sixty-fifth birthday, only that Bombaugh’s maximum disability benefit is not subject to any additional increases. Bombaugh, however, argues that Unum Life must continue to increase the amount of her maximum disability benefit annually. …

“Here, the focus of the parties’ dispute is on the language providing that, ‘[o]n each anniversary,’ Unum Life will increase the maximum disability benefit if, among other things, ‘the policy anniversary when your age is 65 has not occurred.’ This provision sets forth a requirement that Bombaugh had to meet on each anniversary for Unum Life to increase her maximum disability benefit that year. On the policy anniversary after Bombaugh turned sixty-five years old, she no longer met the requirement. Accordingly, Unum Life stopped increasing Bombaugh’s maximum disability benefit in accordance with the terms of the policy.

“We are not persuaded by Bombaugh’s argument that this interpretation does not give full effect to the lifetime sickness benefit rider. The lifetime sickness benefit rider addresses the duration of the maximum benefit period, not the amount of the maximum disability benefit. Consistent with the lifetime sickness benefit rider, Unum Life continues to pay Bombaugh the maximum disability benefit, as that benefit had been adjusted under the cost-of-living adjustment rider.

“Likewise, we are not persuaded by Bombaugh’s argument that the language requiring Unum Life to increase the maximum disability benefit on each anniversary if certain criteria are satisfied is ambiguous. Bombaugh argues that the provision could be interpreted to set forth criteria that she had to satisfy only at one point in time — when she became unable to perform the duties of her occupation. However, that is not what the provision says. …

“… As indicated, the cost-of-living adjustment rider includes the following additional language: ‘If you are disabled on the policy anniversary when your age is 65, future payments for that disability will be based on the Maximum Disability Benefit in effect on that policy anniversary.’ This language again frames the policy anniversary after an insured has turned sixty-five years old as a point at which the maximum disability benefit is calculated differently. When read in conjunction with the language providing that Unum Life will increase the amount of the maximum disability benefit if ‘the policy anniversary when your age is 65 has not occurred,’ the two provisions establish that the cost-of-living adjustment increases stop on the policy anniversary after an insured has turned sixty-five years old. Unum Life’s interpretation — that the cost-of-living increases stop but that an insured continues to receive the increases that previously accrued — gives full effect to both provisions. Bombaugh’s interpretation — that she should continue to receive cost-of-living increases after her sixty-fifth birthday — does not.

“We acknowledge that there are ways Unum Life could have made it even clearer that it would stop increasing the amount of the maximum disability benefit after Bombaugh turned sixty-five years old. Bombaugh suggests, for example, that the cost-of-living adjustment rider could have provided that increases to the maximum disability benefit will freeze on the policy anniversary after an insured has turned sixty-five years old. However, the fact that different language could have been even clearer does not render the language used ambiguous. …

“The judgment entered in favor of Bombaugh on her breach of contract claim is reversed, and a new judgment shall enter dismissing the complaint.”

Bombaugh v. Unum Life Insurance Company of America, et al. (Lawyers Weekly No. 11-016-26) (11 pages) (Blake, C.J.) The case was heard by Valerie A. Yarashus, J., on motions for summary judgment, and entry of final judgment was ordered by her. Joseph M. Hamilton for the defendants; Mala M. Rafik for the plaintiff (Docket No. 24-P-946) (March 4, 2026).

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