Death benefit denied!!

Submitted by hwktlf2 on Thu, 11/14/2013 - 01:35

Asking for my sister. Her husband had an insurance policy that would pay off the house when he died. Well, he died and now the insurer is refusing to pay. "Change" had been made to the policy, his name was marked through and his wife's name was inserted. Is this legal? Wife received "copy" of said change but nothing was signed by either. Is legal action necessary at this point?

Thank you for your time

Posted: 14 Nov 2013 05:21 Post Subject:

Several questions arise...

Why the policyholder's name was marked through? Wife's name was inserted as what? Policyholder or beneficiary? When did your sister receive the copy of the change? Was your brother-in-law alive then? We need more and detailed information to reach out to a conclusion. You can obviously take legal steps if there is anything fraudulent.

Posted: 14 Nov 2013 10:07 Post Subject: death benefit

To approve the insurance, husband had to have validation from two doctors stating health...at the time-no issues and the insurance was approved. the bank said that it mailed out an updated letter about 4 years after the insurance was issued. no explanation as to "how" the name was changed. My sister had to ask for a copy of said document to show the actual name change, a straight line was marked through the husbands name and next to it was my sisters name. This 'name change' was not known until she made a claim three weeks after the husband died.

Posted: 15 Nov 2013 12:20 Post Subject:

"Change" had been made to the policy, his name was marked through and his wife's name was inserted. Is this legal? Wife received "copy" of said change but nothing was signed by either. Is legal action necessary at this point?

and

the bank said that it mailed out an updated letter about 4 years after the insurance was issued. no explanation as to "how" the name was changed.


This makes absolutely no sense. Who made the change and when? A major change such as this would have to have someone's initials to document the change. Why would someone apply for life insurance and then switch who the insured is? Sounds very suspicious to me.

I would be very interested in pursuing the investigation into this matter and, if necessary, finding you legal counsel to sue the insurance company if there is a case to be made. Please click on the link below to contact me confidentially so I can have you send me documents to review.

If anything fraudulent has occurred, there will be a large settlement at stake and this needs to be handled properly ASAP.

Posted: 16 Nov 2013 12:16 Post Subject:

I'm with Max on this one. We finished a non-payment of benefits case in Rapid City a few months ago and made the beneficiary some money. I'd like to know more about this case and get it with counsel. Don't wait on this one very long; I don't want to have to deal with a potential statute of limitations problem.
www.markcolbert.com

Posted: 20 Nov 2013 12:07 Post Subject:

Was this real life insurance or mortgage insurance? Difference being that real life is underwritten at issue, while mortgage insurance is underwritten at death. This is how it happens in Canada, which is why mortgage insurance is not recommended.

I don't see how a name could be marked through, without signatures. I don't see it making a difference, but was it market though by hand?

Posted: 20 Nov 2013 12:26 Post Subject:

johng,

In Canada, mortgage insurance is underwritten at death? Do Canadian policies have a little thing called a Contestibility Period? If someone makes premium payments on a Canadian mortgage insurance policy for, let's say, 2 years and 1 day, then dies, the company can deny the claim?

Posted: 20 Nov 2013 12:38 Post Subject:

There is no contestability period if you have purchase mortgage life insurance, as you really haven't got life insurance, all you have done is pay premiums for 2 years and 1 day for the hope of getting life insurance. Claims are not denied that often however it does happen.

Lets say for instance you get asked a question on if you have had high blood pressure, you answer no as you don't take medication and have no reason to believe you do. Now if your doctor on the other hand specifies in their report that you had slightly high blood pressure and that it should be checked on next checkup, then the underwriter has cause to deny the claim if death could be linked to high blood pressure.

Another thing of note is that the mortgage specialist is very likely not life licensed, so they can not legally offer any advice.

There are several cons about Canadian mortgage insurance, and I always recommend that people rather take out personal life insurance to cover debts. That being said, mortgage insurance is better than no insurance.

PS, yes there is 2 year contestability period for personal life insurance. My insurance manager had a client who's mortgage claim was denied because he was under then influence when he died via snow mobile accident, on the other hand his personal insurance paid.

Posted: 20 Nov 2013 02:23 Post Subject:

Another thing of note is that the mortgage specialist is very likely not life licensed,

Based on your comments here and elsewhere, johng, I seriously doubt that you are a licensed life agent, either.

"Mortgage insurance is underwritten at death" LMAO! Hope you aren't an insurance company executive either.

Posted: 20 Nov 2013 02:37 Post Subject:

Help me with the difference between Real life insurance and Canadian Mortgage Insurance.

In America, a real life insurance policy pays a benefit to someone when the insured's heart stops beating. And it makes sense that an American mortgage insurance policy pays off a mortgage, or similar financial obligation, when the payers/insured's vital signs fall to zero.

Now, something has to happen - for sake of argument, let's say an application is completed and payment submitted to an insurance company prior to a policy being issued. Once that policy is issued and payments made for let's say 2 years (the usual Contestibility Period) the company cannot deny a claim based on information they failed to get. If you go into my website, you'll see a very similar non-payment of benefits claim Max and I worked on earlier this year.

The company, United of Omaha, denied payment of a claim on a policy that had clearly passed its CP. They claimed, "if we had known the insured was disabled, we wouldn't have issued the policy." To make a long story short: They lost. They wound up paying a great deal more than what they would have paid if they'd just honored their own contract.

Find me a few of these Canadian cases where people made premium payment on a policy that didn't exist. I haven't been to Canada in a few years. Max, want to go to Canada and help me sue a crooked mortgage insurance company? Maybe we can do some fishing.

Posted: 20 Nov 2013 10:23 Post Subject:

"Mortgage insurance is underwritten at death" LMAO! Hope you aren't an insurance company executive either.



Its actually not a joke, its quite sad in reality. This is Canadian mortgage insurance, I don't know the intricacies of the USA market as I am not licensed in the USA.

I know "underwritten at death" might seem silly, yet it is 100% true.

Posted: 20 Nov 2013 10:32 Post Subject:

Now, something has to happen - for sake of argument, let's say an application is completed and payment submitted to an insurance company prior to a policy being issued. Once that policy is issued and payments made for let's say 2 years (the usual Contestibility Period) the company cannot deny a claim based on information they failed to get. If you go into my website, you'll see a very similar non-payment of benefits claim Max and I worked on earlier this year.



The insurance is not issued as it has not been under written.


Find me a few of these Canadian cases where people made premium payment on a policy that didn't exist.



Exactly the policy doesn't exist, all they are doing is paying premiums until its underwritten.


I haven't been to Canada in a few years. Max, want to go to Canada and help me sue a crooked mortgage insurance company? Maybe we can do some fishing.



Its not a mortgage insurance company, its the lending institution that is promoting the mortgage insurance. As I mentioned before, the majority are not licensed insurance agents, I would like to say 100% however that is unlikely to be true. No self respecting insurance agent would advise a client to take out this insurance.

The licensed mortgage agent I work with has to inform the client about the mortgage insurance, however she always lets them know that its a stop-gap measure, and she refers them to me.

It seems like the USA and Canadian version are two very different beasts.

Posted: 20 Nov 2013 10:36 Post Subject:

http://www.youtube.com/watch?v=qe61HVGIwUo

About 40 seconds in, its a news story from CBC, a respected new agency. Its a long video, just ignore the beginning as its not about ball room dancing.

Posted: 20 Nov 2013 10:39 Post Subject:

@maxherr, the video above, about 3mins in.

Posted: 21 Nov 2013 01:34 Post Subject:

When I tried to download it, I received the following message.

"The uploader has not made this video available in your country."

Posted: 21 Nov 2013 01:36 Post Subject:

Seriously though, johng. Find me a few of the cases you've described above and I'll look into it. Can I retain you as a consultant?

Posted: 21 Nov 2013 02:31 Post Subject:

Ill see if I can find another version. I guess that the case due to it only being relevant to Canadian market. It seems like there are a lot of differences between insurance in Canada and USA.

Posted: 21 Nov 2013 04:12 Post Subject:

johng, the link contained in the second post worked. It said the claim may be subject to post-claim underwriting. I'm not really sure what to make of that. I'd love to see a couple of cases where a claim was denied. Thanks.

Posted: 21 Nov 2013 03:53 Post Subject:

There should be at least two cases mentioned in that video. I have personally not seen a physical "policy", where a claim has been denied. I don't sell that product, so I don't have any myself.

Posted: 21 Nov 2013 11:36 Post Subject:

The video link does not work for me.

But the print article you linked to states the following:

Underwriting: If you buy term life insurance, the insurance company will assess the risk and establish the premiums based on your health at the time the policy is purchased. In the absence of any fraudulent activity, you know your claim will be paid out when needed in accordance with the terms of your contract. Mortgage insurance is subject to post-claim underwriting, which means technically you could be declared uninsurable when you submit a claim.



Here is where I think you are completely mistaken. Your original post stated that mortgage insurance is underwritten at death. That's clearly wrong according to the opening statement in this article.

The second half of the statement "Mortgage insurance is subject to post-claim underwriting" is probably technically wrong. And it led you to believe that means the only time a mortgage life insurance policy is underwritten is following death. That just isn't so. Mortgage life insurance is underwritten at the time of application, just as any other life insurance. In order for "postclaim underwriting" to occur, there must first be underwriting. Lax underwriting is still underwriting, but it does not open the door to postclaims underwriting -- which is unlawful in the US.

I don't know who the author is, or what his/her actual knowledge of insurance is, but it is based on a blog written by Ellen Roseman, and who knows what knowledge she has about life insurance. I can confidently state that both Mark's and my knowledge of the subject is superior to hers.
Having said that, I am not an expert in Canadian insurance law, but I would be willing to bet that it's mostly the same as American insurance law. Nevertheless, I could be wrong.

Every state in America has adopted laws concerning INCONTESTABILITY, and every state has laws regarding POSTCLAIMS UNDERWITING. Those laws are generally uniform, but there are a few variations.

INCONTESTABILITY happens when a policy has been in force two years (one year in a few states, or if so stated in the insurance contract itself). After a policy has been in existence for more than two years from its issue date, the insurance company cannot use any reason other than nonpayment of premiums to terminate coverage. This even includes fraud in the application in almost all states.

Still, here are a couple of legal escapes for insurance companies, including no insurable interest between owner and insured, impersonation, and violation of public policy at the time of contract formation.

POSTCLAIMS UNDERWRITING is a different concept entirely, and prohibited in all forms of disability insurance in almost all states (the PPACA prohibits it in health insurance nationally). US insurance law generally presumes that all required underwriting is complete when a policy is issued. But it doesn't really apply to life insurance, because of incontestability statutes. Most states have also adopted laws which make disability insurances incontestable after two years in the absence of fraud.

Postclaims underwriting is a particular practice in which the insurer rushes to complete all required underwriting before it issues a policy and then, following a claim, chooses to take a closer look and change the underwriting status of an insured, in some cases terminating coverage as "uninsurable" or to deny a claim on the basis of failure to disclose a preexisting condition -- material misrepresentation or concealment. This to is taken away under the PPACA in health insurance.

So "reviewing" an application looking for fraud is not unlawful, because an insurance company has a public responsibility to prevent insurance fraud, and if it can prove an application for insurance was submitted fraudulently, the policy may be rescinded.

But not in life insurance. After two years, all bets are off. At least not in the US.

So let me examine the issue of the "Feldmans". Syd was not a healthy guy. Not in 1989 and not in 1999, and certainly not in 2008, when he was diagnosed as terminally ill with multiple cancers. However, he probably wasn't very healthy in 1979 when they first obtained a mortgage, either.

But the Feldmans also went on to commit financial suicide. They refinanced their 20-year-old mortgage in 1999, probably with a new 30-year mortgage. And they probably cashed out equity (the suicide part). They applied for insurance then, and obtained Mortgage insurance, which is usually a decreasing term policy with premiums paid as part of the mortgage payment (convenient, but a big mistake).

It doesn't entirely matter that it was the bank that sold the policy, the real problem was that the Feldmans, like many insureds, did not rely on an independent insurance agent to guide them and educate them about life insurance. They believed what someone in the bank told them, and that someone is supposed to be a licensed agent

There is nothing wrong with Mortgage insurance, but when the premiums are paid within the mortgage payment, stopping the payments means terminating the insurance for nonpayment of premium (see my remarks above).

Did the Feldmans stop paying on their refinanced mortgage? You might say NO, but you'd be wrong. Each time the loan was refinanced, an insurance policy was teminated. They were apparently sold a new policy in 2002, when they refinanced a second time. They didn't have to be terminated, but the Feldmans' lack of insurance knowledge was proved costly.

Now from this point, some things get lost in your translation, but are present in the Star blog. You failed to mention that :

TD [the insurer], to its credit, conducted a new investigation once the Star became involved. On March 6, Ros heard that the mortgage would be paid out completely.

So all wasn't quite as disastrous as represented.

Now this is also where my knowledge of Canadian law is lacking. The blog indicates that the BANK sold the insurance which was underwritten by Canada Life Assurance, and "serviced" by TD Life Insurance. Were bank personnel qualified to transact insurance -- or are they not required to be licensed? That I don't know for sure.

Under US law, this would never have been an issue. If a policy were in force for more than 2 years, let alone 6 or 7, ANY discussion of misrepresentation in the application is a NON-ISSUE. And such a claims denial would wind up involving someone like Mark or myself, representing a widow/widower who was the victim of an insurance company's bad faith in a big bucks litigation.

I would be completely surprised to find that Canada has no law about life insurance incontestability, and if so, then what happened might not be a problem. But it appears to me, from the few websites I have consulted, that there probably IS a two-year incontestability provision in Canadian life policies. But is also appears that Canada law does not bar fraud in a life application, and could allow rescission years later.

That's the whole point of incontestability -- to prevent an insurance company from charging premiums for decades and then decide after a person dies to underwrite the policy in order to avoid a claim. Insurance companies would pay no claims.

Did the Feldmans defraud (or attempt to defraud) an insurance company. I cannot say. If what they say was fully disclosed to an agent, and the agent has deliberately withheld the information from the insurer, that is an action that opens the agent to very costly coverage E&O law suits.

Unless and until the OP provides more details, I cannot say more than this.

Posted: 04 Jan 2014 10:45 Post Subject:

This is the simple case of fraud but company should have enough evidence to show to court that policyholder made changes prior to his death otherwise beneficiary will get the full claim and also can claim for compensation for the losses suffered.

Posted: 08 Jan 2014 02:43 Post Subject:

fxaddictor . . . please define "fraud" for us and show exactly where it occurred in this thread. A death claim was paid. How is that fraud?

Posted: 27 Jun 2014 05:56 Post Subject: Contestable period

Can my ins claim be denied durning the contestable period if I was working and receiving disability but put down I work instead of being disabled? My drivers license was suspended 4 years ago for not paying income taxes. The application asked if I had a DL suspended in the last 3 years and I said no because it's been 4 years since they were suspended. Can they deny my claim because they have been suspended for 4 years?

Posted: 27 Jun 2014 06:30 Post Subject:

Is your license currently suspended? I think it is, and if so, it "has been suspended in the last three years". The question is not about what date it was originally suspended if it is currently suspended.

You also misrepresented your disability status.

Now, you posted this in the LIFE INSURANCE forum under a thread titled Death Benefit Denied! And I don't think this post has very much at stake in terms of life insurance at all.

Given your self-report here compared to what you told an insurance company, I believe you represent too much risk for an insurance company to protect.

Posted: 30 Jun 2014 11:25 Post Subject: Denial of death benefit

I am an experienced life insurance litigation lawyer. In order to answer this question, we would need copies of the life insurance policy, the change form, and any correspondence received from the company. B. Blakeman, Esq.

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