Claim Not Paid News Story.
- Thread starter WinoBlues
- Start date
- 18,989
That's odd since even the GI companies that are ROP for the first 2 years will pay the full face in the case of accidental death.
- Thread starter
- #13
- 24,978
GI policies do not ask any questions to contest. Plus AD in the first two years is a part of the policy.
If the ROP had health questions and the answers were falsified they would not have to.
- 18,989
I'm never surprised when a company doesn't pay. I'm surprised when they pay a contestable claim.
- Thread starter
- #16
- 24,978
Different experiences. Could be due to the companies we write, the clients we serve or the answers asked and answered on the app and who is doing the asking and answering.
- 18,989
I wasn't particularly talking about personal experience. Most of my contestable claims have been paid. Doesn't mean I'm not surprised when they do pay.
FU would be a different story if they didn't pay but I've never had a contestable claim on a fully underwritten policy. Can't think of knowing about one first hand either.
But I know of many SI contestable claims that weren't paid. And I've heard of several that were rescinded while the person was still alive using the plan F provision of MIB.
I know of an agent that was pleasantly surprised last week when a company paid the death benefit on a 3 month old policy. I don't know all the details but he was bragging on it. He sure seemed surprised.
- 1,405
It's really not a question of blame. If companies could only reduce the amount of the claim as the way to deal with mis-statement of smoking, then an agent would be to blame if they sold the smoking policy.
If the company could only cut the amount paid in claim, an agent would be negligent not selling the non-smoking policy to his smoking client. If the same $1,000 premium would buy you a non-smoker face amount for $1,000,000, but the same premium would only buy $350,000 of smoker, then sell the $1,000,000 non-smoking million knowing the downside is that it gets rolled back to the $350,000 if they find out otherwise in the event of a claim. But if the company doesn't find out about the smoking, the client's beneficiary gets a bunch more money.
So realizing that would be the situation created by that practice, companies have no choice but to deny claims, to discourage the practice.
What you seem to be missing out on is the client is paying a lower than they should due to their increased mortality from smoking... And, in most cases, the company was never able to prove that they really only owed the smaller face amount.
- Thread starter
- #20
- 24,978
Yeah, that plan F deal will get me to stop writing a company. I have been writing SI a long time. Not solely or in the volume the FE guys do. But a long time. While I think we are all cautious when there is a contestable claim I believe the majority are paid. Definitely, would be more memorable if one was not paid versus a dozen paid.
I agree that it probably happens more on FE cases as the people are sick otherwise most would have qualified for a more benefit rich FU plan. So probably more nature of the market.
