by hwktlf2 » Thu Nov 14, 2013 01:35 am
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
Thank you for your time
Posted: Thu Nov 21, 2013 11:36 pm 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: Sat Jan 04, 2014 10:45 pm 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: Wed Jan 08, 2014 02:43 pm 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: Fri Jun 27, 2014 05:56 am 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: Fri Jun 27, 2014 06:30 am 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: Mon Jun 30, 2014 11:25 pm 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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