Can my ex boyfriend take a life insurance policy on me?

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PostPosted: Mon Jan 04, 2010 11:23 pm   Post subject:   

Some companies find this to be bad behavior, really stupid I know. I remember when I became an appointed broker with MetLife, they gave me their agent's handbook/guide they give their career agents. In the booklet, which I didn't read for several months afterwards, they list certain transactions that were not allowed, they included:



- Selling a life insurance policy intentionally for the purpose of later assignment of a beneficiary who is a church or non-profit entity



- Selling a life insurance policy with the intent/idea that it could/will be used for either a life or viatical settlement.



I've also submitted business to Mutual of Omaha, their application asks in several places if the insured intends to change the beneficiary or owner of the policy after issue.



What you did was not illegal, but I think insuranceinvestigator was refering to changes in laws and practices that no longer make this much of an issue.

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PostPosted: Mon Jan 04, 2010 11:35 pm   Post subject:   

They almost all (all?) now ask if the policy is going to be sold. I don't think that I can recall ever seeing a question in an application that asked about a change in beneficiary. If the question did come up, we would answer it honestly.



Even with what you are saying, there isn't any problem with changing from one beneficiary to another beneficiary who is a natural person.


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PostPosted: Tue Jan 05, 2010 4:14 am   Post subject:   

Quote:
I remember earlier in my career and writing policies on homosexual couples. We would simply put the parents as the beneficiaries and then change the beneficiary at the policy delivery.




Okay, Hero. Let's all take a look at this together. Yes, I've noticed your ever-contentious, and often needless responses to almost every post with which you've interacted. I anticipate the same from you in this case.



Quote:
I remember earlier in my career and writing policies on homosexual couples.




Your response leads an intelligent person to believe that since you claim to have written policies on people with an "alternative lifestyle," you clearly understood my post and therefore acknowledged the difficulty faced by some agents in getting these policies through underwriting.



Quote:
We would simply put the parents as the beneficiaries and then change the beneficiary at the policy delivery.




In this statement, you've very clearly explained how you circumvented the rules or guidelines that an insurance company, with which you were appointed, required its agents to follow. Your actions were clearly manipulative, in violation of company policy, and certainly not in the policyholder's best interest. Had one of these cases been investigated, your dishonesty could very well have caused a policy to be nullified.



You see sport, it simply didn't matter that you changed the beneficiary designation at delivery; when you completed the application, you knew the truth and, afterwards, took measures to change or alter the basis uponwhich the policy had been issued.



Because you are (or have been) a licensed agent, you undoubtedly understand why your actions were, if nothing else, questionable, unethical, in direct violation of the MDRT Code of Ethics, could very well have violated underwriting guidelines and, again, not in the consumer's best interest.



I anxiously anticipate your quarrelsome response but submit to all those who read this post that I have done nothing more than interpret your response (as any rational person would) and gave examples of insurance guidelines and Code - as I would have if I were retained by counsel to investigate any cases you wrote.


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PostPosted: Tue Jan 05, 2010 7:56 am   Post subject:   

SLAM!



Funny how some of the mainline insurers are now encouraging agents to go looking for the life settlement business. Might as well put it on the books with the intent of keeping it there instead of potentially losing it.



Still a sick side of the business, trading personal fortunes on the lives of human beings.



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PostPosted: Tue Jan 05, 2010 10:17 am   Post subject:   

Mark, With my very first case with working with a gay couple, I called the insurance company to see if it would be an issue. They are the ones who told me that the best thing to do was to name the parent and then have the client change the beneficiary after the policy was issued.



As far as I know, the insurer had no rules or guidelines against these types of beneficiary changes. If they did, they were never conveyed.


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PostPosted: Tue Jan 05, 2010 1:15 pm   Post subject:   

Notwithstanding the archaic practices of insurance companies that today are known to be unlawful, I find it disturbing whenever an agent recommends naming anyone other than the intended beneficiary as the beneficiary. Spendthrift trust provisions in the law prevent anyone from interfering with the flow of money from an insurer to a named beneficiary. In the absence of some other documented proof, a person's claim that the money was intended for them and not the named beneficiary will not usually be acceptable to the court.



Leaves the agent wide open to an E&O claim for the death benefit.



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PostPosted: Tue Jan 05, 2010 3:47 pm   Post subject:   

Max, I agree with you that naming anyone other than the intended beneficiary as beneficiary.



However, in my example, I don't know how I was leaving myself open for anything considering that the change was done at the policy delivery and if it wasn't done that way, they could not have gotten the insurance.


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PostPosted: Tue Jan 05, 2010 5:20 pm   Post subject:   

Guest1, I appreciate the surprising response.



Legally speaking, I'm believe beneficiary designations generally fall more under the heading of contract law. Granted, certain ST provisions might apply in some cases but, basically speaking, they don't need to.



My point wasn't necessarily to chastise Guest1-because everyone knows how easily beneficiary designations can be manipulated.



If he (or any other agent) recognized the potential conflict, took the time to telephone a home office representative, was told to "alter" the designation in the manner he explained, and, for God's sake, he recorded that home office rep's name and title in the client's folder, an E&O claim goes right out the window.



Here's something to ponder:



A gay couple are living together, raising teenage children, buying a house, attending PTA meetings, etc, etc, decide to buy $2MM life insurance policies on each other. The agent, completes the applications, collects the relatively large first premium and overnights the paperwork to underwriting.



One of the ever-vigilant (not) underwriters notices the same-sex designations and forwards the paperwork to the 66 year-old Senior Underwriter for approval. This guy, who'd done 4 tours in Viet Nam, bursts into laughter, exclaims something like "F-ing fags, not on my watch" disapproves the case and sends it back to the agent.



This certainly isn't right but, if I had a dime for every time something like this has happened, I could buy a house like Tiger's. You see, in almost every situation I've ever seen (there's been a few) Senior Underwriters are golden and their decisions seldom questioned-period.



After receiving the paperwork back from underwriting with a big F.O. stamped on it, the agent learns that if he alters the designation (in the way we've previously discussed) the "big guy" won't be queried - no punn intended - the policies will be approved, and Christmas will be much richer.



Years later, one of the policyholders dies tragically and his/her family member (remember the teenager I listed above?) believes they deserve more of the death benefit and hires a lawyer. With very little effort, the lawyer discovers that the policy was initially declined and, in order to have it approved, the agent circumvented the rules in place at that time. Get the picture?



There can be no Grandfather Provision in this case. The company's counsel will show a paper-trail large enough to taxi a jet on and the court will decide that since the rules were broken at the time the policy was issued, both policies are thereby nullified and all premiums are to be returned - with interest.



What if the agent had kept the name and title of the home office rep who taught him how to alter the designations to get the applications through underwriting? I know the answer to this.



Oh, the Senior Underwriter gets a pair of those "golden handcuffs" and retires early with two pensions. Must be nice.



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PostPosted: Tue Jan 05, 2010 6:05 pm   Post subject:   

Mark, help me to understand your post. I'm not in anyway trying to be argumentative. I'm seeking to understand.



Here are the facts of your case as I understand them. Ms. Gay applies for life insurance with Ms. Lesbian as beneficiay. She wants to take care of Ms. Lesbian and their children if she dies. The insurance company turns down the application. Ms. Gay reapplies for insurance, but this time with her mom as the beneficiary. The insurance company has no problem with this and approves the policy. After the policy is issued, Ms. Gay changes the beneficiary to Ms. Lesbian. The insurance company has no problem with this change of beneficiary. Some time later, Ms. Gay dies. Ms. Lesbian gets the proceeds.



The teenager, now an adult, wants more of the money and decides to get an attorney. This brings everything to the attention of the insurance who then decides not to pay the claim. Do I have my facts straight? Assuming that I do, I have a few questions/comments.



First of all, what possible grounds could the adult child have to the death benefit? If Ms. Gay wanted him to get the money, he could have been named beneficiary from the very beginning and the policy would have been approved. Ms. Gay also had the ability to change the beneficiary to him at any time if she wanted him to have the money.



Secondly, under what grounds could the insurance company not pay the claim? The insured didn't commit any fraud. They answered all questions honestly. They broke no laws or company rules by changing the beneficiary.



Now, I could see the company possibly going after the agent, but I can't see them getting away with not paying the death claim. The insured answered everything honestly. They didn't hide any information.





(As an agent, I would never do something like you are describing without the ok from the company. Hey, agents reading this, our career is more important than any individual case.)


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PostPosted: Tue Jan 05, 2010 6:08 pm   Post subject:   

Upon further review...



Mark, I just re-read your post. It sounds like you might be talking about a different scenario. I am talking about Ms. Gay being the owner of Ms. Gay's policy. It sounds as if you might be talking about Ms. Gay being the owner of Ms. Lesbian's policy. This makes a world of difference.


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PostPosted: Tue Jan 05, 2010 9:27 pm   Post subject:   

Having spouses own each other's policies=terrible planning mistake.

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PostPosted: Wed Jan 06, 2010 3:43 am   Post subject:   

Guest1, While I enthusiastically support your desire to understand the following scenario, please understand that it is nothing more than an example of cases I have worked in the past - it is not real. I will continue to use it for instructional purposes only.




Okay, let's take this apart:



Quote:
Ms. Gay applies for life insurance with Ms. Lesbian as beneficiay. She wants to take care of Ms. Lesbian and their children if she dies.


Yes, this is correct. For our purposes, each of the women have ownership of their own policies
.



Quote:
The insurance company turns down the application.




You are correct here as well.



WHY though did the insurance company turn down the applications?



Because the women did not hide the fact they were openly gay and, at that time, most insurance companies REFUSED to issue polices to gays and justified their company policy by claiming the proposed insured failed to meet the insurable interest requirements.




Quote:
Ms. Gay reapplies for insurance, but this time with her mom as the beneficiary.




Ms. Gay had no idea she could reapply until, by your own admission, an agent explained that if she teporarily changed her beneficiary designation, the policy would be issued. Afterwards, Ms. Gay is told she can change her designation and everyone will be happy.



Herein lies the problem. THE COMPANY REFUSED TO ISSUE THE POLICY WHEN MS. LESBIAN WAS A NAMED BENEFICIARY.



Quote:
The insurance company has no problem with this and approves the policy.




Because, in a manner of speaking, they've been lied to. If you have anywhere near the experience I give you credit for, you know that a company's underwriting and inforce policy service departments don't communicate. They haven't a flipping clue what's happened and how the proverbial wollen sock has just been pulled over their heads.



Quote:
After the policy is issued, Ms. Gay changes the beneficiary to Ms. Lesbian.




Again, if this was not an issue, the company would have issued the policies in the first place. It doesn't matter what's written on the application or change of beneficiary form; their underwriting guidelines have been circumvented and this places the policies in a position to be challenged - and the 2 year exclusion clock will not even start at this point.



Quote:
The insurance company has no problem with this change of beneficiary.




Because they have no idea what's happened.



Quote:
Some time later, Ms. Gay dies. Ms. Lesbian gets the proceeds.




That's the way it's supposed to work - had the policies been issued truthfully.



Quote:
The teenager, now an adult, wants more of the money and decides to get an attorney.




If we started a thread discussing why family members challenge life insurance beneficiary designations or why some greedy people are seemingly never happy with what's been left to them, it would be never-ending.



Quote:
This brings everything to the attention of the insurance company who then decides not to pay the claim.




They're not allowed to. An attorney has filed a motion to suspend payment pending the outcome of the investigation and the court's decision. The company will probably place the funds in some sort of trust account under direction of the court.



Quote:
Do I have my facts straight? Assuming that I do, I have a few questions/comments.




Yes, you seem to have everything correct.



Quote:
First of all, what possible grounds could the adult child have to the death benefit?




Asked and answered.



Quote:
If Ms. Gay wanted him to get the money, he could have been named beneficiary from the very beginning and the policy would have been approved.




You are correct again. But, at that time she didn't want her son to receive the money, she wanted he partner to be her beneficiary.



Quote:
Ms. Gay also had the ability to change the beneficiary to him at any time if she wanted him to have the money.




Correct again.



Quote:
Secondly, under what grounds could the insurance company not pay the claim?




Asked and answered.



Quote:
The insured didn't commit any fraud.




Yes they did. When the company's underwriting guidelines were violated, the policy could have been nullified.



Quote:
They answered all questions honestly.




You are correct again. And based on those answers, the policies were initailly declined.



Quote:
They broke no laws or company rules by changing the beneficiary.




Yes they did. Had the whole "ordeal" been completed honestly, the policies would never have been issued.



Quote:
Now, I could see the company possibly going after the agent,




I agree with you on this observation as well.



Quote:
but I can't see them getting away with not paying the death claim.




If the policy was submitted dishonestly, the company would not be required to pay the death claim.



Quote:
The insured answered everything honestly. They didn't hide any information.




You're correct again. AT THE TIME THE APPLICATIONS WERE COMPLETED, all questions were answered honestly. The fraud occurred after the fact, and in this case, with guidance from the agent.



Quote:
(As an agent, I would never do something like you are describing without the ok from the company. Hey, agents reading this, our career is more important than any individual case.)




I'm glad you see the value in this and I support your position completely.


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Please feel free to go to my website at www.markcolbert.com or, if you have a specific question, you can email me directly. I hope I can answer any questions you might have. If not, I can certainly find an answer right away.
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PostPosted: Wed Jan 06, 2010 3:43 am   Post subject:   

Guest1, While I enthusiastically support your desire to understand the following scenario, please understand that it is nothing more than an example of cases I have worked in the past - it is not real. I will continue to use it for instructional purposes only.




Okay, let's take this apart:



Quote:
Ms. Gay applies for life insurance with Ms. Lesbian as beneficiay. She wants to take care of Ms. Lesbian and their children if she dies.


Yes, this is correct. For our purposes, each of the women have ownership of their own policies
.



Quote:
The insurance company turns down the application.




You are correct here as well.



WHY though did the insurance company turn down the applications?



Because the women did not hide the fact they were openly gay and, at that time, most insurance companies REFUSED to issue polices to gays and justified their company policy by claiming the proposed insured failed to meet the insurable interest requirements.




Quote:
Ms. Gay reapplies for insurance, but this time with her mom as the beneficiary.




Ms. Gay had no idea she could reapply until, by your own admission, an agent explained that if she temporarily changed her beneficiary designation, the policy would be issued. Afterwards, Ms. Gay is told she can change her designation and everyone will be happy.



Herein lies the problem. THE COMPANY REFUSED TO ISSUE THE POLICY WHEN MS. LESBIAN WAS A NAMED BENEFICIARY.



Quote:
The insurance company has no problem with this and approves the policy.




Because, in a manner of speaking, they've been lied to. If you have anywhere near the experience I give you credit for, you know that a company's underwriting and inforce policy service departments don't communicate. They haven't a flipping clue what's happened and how the proverbial wollen sock has just been pulled over their heads.



Quote:
After the policy is issued, Ms. Gay changes the beneficiary to Ms. Lesbian.




Again, if this was not an issue, the company would have issued the policies in the first place. It doesn't matter what's written on the application or change of beneficiary form; their underwriting guidelines have been circumvented and this places the policies in a position to be challenged - and the 2 year exclusion clock will not even start at this point.



Quote:
The insurance company has no problem with this change of beneficiary.




Because they have no idea what's happened.



Quote:
Some time later, Ms. Gay dies. Ms. Lesbian gets the proceeds.




That's the way it's supposed to work - had the policies been issued truthfully.



Quote:
The teenager, now an adult, wants more of the money and decides to get an attorney.




If we started a thread discussing why family members challenge life insurance beneficiary designations or why some greedy people are seemingly never happy with what's been left to them, it would be never-ending.



Quote:
This brings everything to the attention of the insurance company who then decides not to pay the claim.




They're not allowed to. An attorney has filed a motion to suspend payment pending the outcome of the investigation and the court's decision. The company will probably place the funds in some sort of trust account under direction of the court.



Quote:
Do I have my facts straight? Assuming that I do, I have a few questions/comments.




Yes, you seem to have everything correct.



Quote:
First of all, what possible grounds could the adult child have to the death benefit?




Asked and answered.



Quote:
If Ms. Gay wanted him to get the money, he could have been named beneficiary from the very beginning and the policy would have been approved.




You are correct again. But, at that time she didn't want her son to receive the money, she wanted he partner to be her beneficiary.



Quote:
Ms. Gay also had the ability to change the beneficiary to him at any time if she wanted him to have the money.




Correct again.



Quote:
Secondly, under what grounds could the insurance company not pay the claim?




Asked and answered.



Quote:
The insured didn't commit any fraud.




Yes they did. When the company's underwriting guidelines were violated, the policy could have been nullified.



Quote:
They answered all questions honestly.




You are correct again. And based on those answers, the policies were initailly declined.



Quote:
They broke no laws or company rules by changing the beneficiary.




Yes they did. Had the whole "ordeal" been completed honestly, the policies would never have been issued.



Quote:
Now, I could see the company possibly going after the agent,




I agree with you on this observation as well.



Quote:
but I can't see them getting away with not paying the death claim.




If the policy was submitted dishonestly, the company would not be required to pay the death claim.



Quote:
The insured answered everything honestly. They didn't hide any information.




You're correct again. AT THE TIME THE APPLICATIONS WERE COMPLETED, all questions were answered honestly. The fraud occurred after the fact, and in this case, with guidance from the agent.



Quote:
(As an agent, I would never do something like you are describing without the ok from the company. Hey, agents reading this, our career is more important than any individual case.)




I'm glad you see the value in this and I support your position completely.


_________________

Please feel free to go to my website at www.markcolbert.com or, if you have a specific question, you can email me directly. I hope I can answer any questions you might have. If not, I can certainly find an answer right away.
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PostPosted: Wed Jan 06, 2010 6:47 am   Post subject:   

Guest1 . . .



In your original proposition, a beneficiary -- but not the truly desired beneficiary -- is named with the intent to change the beneficiary after the policy is issued. Fine, that's a prerogative of ownership.



The potential exists following policy issue and prior to delivery that the insured dies. There is no opportunity to change the beneficiary as desired, the money is paid to the named beneficiary, who legally may do with it has he/she/it pleases, and has no obligation to do anything else with the policy proceeds, even if "everyone" knew what the intent was.



Having said that, with the exception of a handful of states that have not brought their insurance codes into full alignment with the NAIC model regs and the laws of other states, today this whole scenario is patently unlawful -- the insurer cannot reject an application on the basis of who the beneficiary may be, what their gender is compared to the insured, or what the relationship between the insured and beneficiary is.



Agents are supposed to know this, and inviting the insured/owner to name someone other than the true intended beneficiary us what exposes the agent to an E&O claim if the proceeds end up being paid to someone else by name.



A common example of this is an agent who tells a client "You cannot name a minor child(ren) as the beneficiary. You have to name an adult who will use the money for your child." Absolutely wrong under California law, and almost all other states. It is true that the insurer cannot pay money to a minor, but by naming anyone else as beneficiary earmarks the money as their property and they cannot be forced to do anything with the money they choose not to do.



A good agent would advise the client to name the child(ren) as beneficiary in the application and would refer the client to a legal/tax professional for proper advice (which would probably be some kind of trust that makes the child(ren) beneficiaries of the trust, and the trust the beneficiary of the life policy. Once the trust is in place, then the beneficiary can be changed from child to trust, and the insurer cannot prevent that either.



I'm not certain I would trust the "rep" from the insurer, even if it was in writing, unless they were from the insurer's Office of General Counsel. CSRs do not typically have the authority to give out such advice for fear that they are obligating an insurer to something it would otherwise choose to avoid. On the few occasions I've had very complex beneficiary designations to word on an app (or separate sheet of paper in one instance), I have called the OGC to ask for their advice. On one case, the lawyer said, "Draw a diagram of what they are proposing, have them sign the drawing, and send it to us. If we can figure out how to make it work, we'll write it for you and you can take it to the owner for their approval."



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PostPosted: Wed Jan 06, 2010 1:29 pm   Post subject:   

Quote:
Knowing that some of the things I did back in 1996 are the reason for the change.
Good point...and I can see that would be terrific job satisfaction Mark...


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