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 Posted: Tue Oct 13, 2009 10:44 pm Post subject: Is this Illegal? |
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I was given this letter to have clients sign that wanted to cancel their policy.
| Quote: | POLICYHOLDER DECLINATION OF COVERAGE LETTER
(To be signed by client to authorize cancellation of policy or pending application)
I, (Mr./Mrs./Ms.)___________________________ (Policyholder/Applicant Name), certify that I will not hold _________________________ (Consultant Name), nor COMPANY’S NAME REMOVED liable for losses or damages caused by my decision not to accept the coverage that was suggested by my COMPANY’S NAME REMOVED Consultant, ________________________ (Consultant Name). By signing this declination letter, I am attesting that I have been FULLY educated and understand all of the risks of my decision, yet still wish to decline the coverage benefits made available to me.
_______________________________________
Signature of declining policyholder/applicant
_______________________________________
Print name
___________________
Date of above signature
_______________________________________
Signature of COMPANY’S NAME REMOVED Consultant
_______________________________________
Print name
___________________
Date of above signature |
This is a portion of the email it was attached to:
| Quote: | | Also see attached declination letter use this if needed to be able to get back in the door to save any business that might be canceling. |
This seems really wrong to me.
Any suggestions?
Alan |
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acalhoun
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| Posted: Wed Oct 14, 2009 9:32 am Post subject: |
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It seemed a declination letter which is designed with an aim to retain clients. As far as client retention is concerned, I don't see any problem with it if the clients are not complaining. Still, I'd be eager to know which aspect of it seemed illegal to you and why.
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anonymous00
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| Posted: Wed Oct 14, 2009 12:02 pm Post subject: |
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acalhoun
Are you saying your company wants you to present this to new non-purchasing clients after you've made your pitch and they decline? That's what I'm getting from you...I doubt it's illegal, but most certainly (IMO) immoral, and a pretty cheeze piece of sales work..
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Lori
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| Posted: Thu Oct 15, 2009 7:56 pm Post subject: |
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Simply put, this "declination" letter is nothing more than a VERY POORLY WRITTEN waiver. Given my experience in this area, this specific example is nothing more than a lawsuit waiting to happen.
There is no way on the face of this planet that I would have EVER allowed any of my producers/employees use this. It is fraught with legal errors, contains manifold openings for the plaintiff's attorney, and will (guaranteed) end up in litigation at some point.
This waiver will hold absolutely NO legal water.
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InsTeacher
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| Posted: Thu Oct 15, 2009 10:48 pm Post subject: |
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First it is not illegal as long as they don't require it to have the client get there money back. You for sure can not MAKE a client sign this as that would be illegal.
The only time i have seen this used was not for a sales reason, but to truly document that the client was not taking your advice. For example. If the client needs $3mm in coverage to cover estate taxes and only wants to buy $100k then I would draft a letter that states that the client was informed of the possible $3mm estate tax liability and has been advised to purchase $3mm in coverage. I would ask the client to sign and if they refused i would document in the file that the client refused to sign this document. You can not MAKE the client sign something like this. It is very common for banks to use documents like this to verify that certain information is given to client and is understood by clients. Although this is obviously a blatant sales tactic that in the end wont work. |
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Marpol
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| Posted: Fri Oct 16, 2009 7:19 pm Post subject: |
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It appears the declination letter is being used as a means to protect an agent from an errors and omissions claim. It's a constant struggle with insurance agents - they explain all of the coverage options to a client, then the client says they only want "cheapest" but after an accident the client conveniently forgets that he choose to only get minimum coverage and sues the agent for not recommending additional coverages.
It is not unusual for agents to have a client sign a letter stating they have been offered certain coverages but made a decision not to purchase those coverages, against their agent's advice. Certainly though, the letter shouldn't be presented to the client until after the agent verbally explained all coverage options.
I would recommend the agent run this by their errors and omissions agent for advice before using it as that agent should be fluent with how to mitigate false claims from clients that additional coverages weren't offered when in fact they were.
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AnMarieB
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| Posted: Mon Oct 19, 2009 2:24 am Post subject: |
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| the last thing you want is to prmpt a lawsuit ansd piss of your client at the same time - I'd be keen to hear more from Ins Teacher |
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heidrek
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| Posted: Mon Oct 19, 2009 6:32 am Post subject: |
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Hi, I don't see how this is gonna be beneficial for an agent. Does it really hold good under such lawsuits? Pinkfloydfan
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Pinkfloydfan
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| Posted: Thu Nov 05, 2009 2:44 pm Post subject: |
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This is a pretty standard dec page--though a little wordy--and several insurance companies have some version of this for various products.
It's not legally binding it's there so an agent can prove a degree of due dilligence if the insured decides to forget that a recommendation was made for something they turned down and later would have made claims for. A CYA mechanism for the agent if you will.
Of course, there's an added effect this sort of thing has, which is to force a client to finalize a decision on an insurance purchase, which is hard for a lot of people to do--for some people we like to leave things in the air. There is a degree of retainined business or sales closed as a result of this sort of document when clients see it and change their mind about declining coverage. A good and trustworthy agent should be willing to make his/her clients understand the magnitiude of their decisions.
I know a few attorney's who make a lot of money suing life agents who fail to talk to their clients about disability insurance.
And if a client came to me wanting to lapse any form of insurance, you better believe I'm going to want some form of documentation that says they fully understand what kind of risks they are now exposed to as a result of removing their coverage. |
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BNTRS
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| Posted: Fri Nov 06, 2009 6:03 am Post subject: |
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I read my first post and had to rethink a couple of things.
First of all, I have no problem whatsoever with properly written waivers intended to inform a client of potentially poor coverage decisions. The problem I have is with the language in this particular waiver. It's terrible. One of the first things I teach in my contract law classes is to remember the old adage of "that waiver ain't worth the paper it's printed on." There's a reason for that adage- it's commonly true and a good attorney could rip this particular waiver a new one in court. 
Another thing that caught my attention was the use of the word "consultant" in the waiver language:
| Quote: | | I, (Mr./Mrs./Ms.)___________________________ (Policyholder/Applicant Name), certify that I will not hold _________________________ (Consultant Name), nor COMPANY’S NAME REMOVED liable for losses or damages caused by my decision not to accept the coverage that was suggested by my COMPANY’S NAME REMOVED Consultant, ________________________ |
The reason this got my attention is that use of the word "consultant" usually denotes a specific class of license authority when used in the insurance world. In every state in which I work, you must have a consultant's class license in order to use the actual word "consultant' in any legal language. That includes business cards, email, written communication and LEGAL DOCUMENTS such as this waiver.
I wonder what state our OP is in?  
Finally, I dare you to take this language to court and have a hope of winning:
| Quote: | | By signing this declination letter, I am attesting that I have been FULLY educated and understand all of the risks of my decision, |
Answer me this- what insured has EVER fully understood ALL of the risks of ANY decision they make with an insurance policy? Most of the agents I have known in my life don't fully know the intricacies of the contracts they sell. Many do, and they're the ones to buy from, especially when considering high end stuff.
If you're going to use this as a legitimate marketing tool, and believe me- I understand the purpose of the waiver, just do it right. The reason most waivers fail in court is because they're poorly drafted and usually written by amateurs. This one was probably written by some lower or medium level manager that didn't even consider the implications. Verrrry typical and really stupid.
The smart move is to go through legal at the carrier level and ask them to draw you a waiver. They've heard it before and possibly already have "something in the can" ready to go.
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InsTeacher
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| Posted: Fri Nov 06, 2009 6:48 am Post subject: |
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| I've seen many agents obtain these types of waives when one of their client declines coverage. I guess it should be true of cancelling the policy as well. makes sense to me to have someone sign it... if they will. That way when they have a loss on down the road, file a claim and it's denied, the agent has some degree of protection from an E & O complaint. |
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tcope
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| Posted: Sat Nov 07, 2009 4:52 am Post subject: |
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I think the question to be asked of the original poster is what they meant by illegal. Illegal in terms of would this waiver hold up on court or illegal to use this tactic to preserve to obtain business?
I would say it couldn't be my dec page of choice. Because I believe the use of such a thing is to document that possible coverage has been discussed and that a client has turned down a recommendation. I also see the benefit in having them commit to their decision to say no--lots of times no or maybe simply means "I don't want to deal with this today" and you aren't doing them any favors by letting them off the hook and hoping that tomorrow or next week they might change their mind.
I have a dec page for disability long term care insurance that simply says a recommendation has been made, I understand that I may not be able to get this coverage later and likely won't save any money by waiting. However I've decided to decline this coverage. I'm not asking them to waive any legal right. Simply documenting that we talked about it and they didn't want it. |
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BNTRS
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| Posted: Wed Nov 11, 2009 2:52 pm Post subject: polices-life settlement |
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are their really tons of policys avalible? AND AT WHAT PRICE RANGE ?
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ABE
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heidrek
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| Posted: Fri Nov 13, 2009 9:12 pm Post subject: |
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| Quote: | | I would say it couldn't be my dec page of choice. |
| Quote: | | I have a dec page for disability long term care insurance that simply says a recommendation has been made, I understand that I may not be able to get this coverage later and likely won't save any money by waiting. |
This has nothing to do with the dec (declarations page). A Dec page identifies the insured, insurer, policy number, policy period, usually the premium for the policy period, coverage limits, loss payees, etc. It doesn't deal with waivers, etc. discussed in this question thread.
This waiver would not be considered part of the entire contracts and is therefore not binding on the insurance contract in any manner. As I said in a previous post- there's no way on the planet that this waiver (as it's worded) would hold up in court. No way...period.
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