Colorado Springs veteran sues USAA for denying husband’s $1 million life insurance policy

[Robert Barney]

I don't think this has been addressed, Why did USAA issue this policy when they had the right to review medical records and a signed MIB to do their on fact finding?

Why pay money to underwrite every case, when you can just pay money to underwrite claims and then deny the claim based upon what you find at that point? And if regulators let them get away with that behavior, who's to stop it?

What did the rest of you think was going to happen with this rush to Simplified Issue junk?

 

[VolAgent]

Why pay money to underwrite every case, when you can just pay money to underwrite claims and then deny the claim based upon the underwriting at that point? And if regulators let them get away with that behavior, who's to stop it?

What did you all think was going to happen with this rush to Simplified Issue junk?

Interesting, I thought you were a fan of jet issue?

Also, I find this line of thought interesting. This is basically advocating, "Lies to an insurance company are fair game, but we will hold insurance companies to the strictest of standards."

Now, the playing field between insurance companies and policyholders is unfair except for large businesses or wealthy and sophisticated individuals/trusts. The gap in knowledge and understanding is broad, so laws and regulations should always have a bias towards the policyholder. That said, there is a world of difference between giving consumers the benefit of the doubt and not holding consumers liable for their lies, intentional or by omission.

And in this case, I would say the insured lied. He was asked several questions in several different ways that he should have said yes to. I can get not thinking of sleep apnea as a respiratory disease. While it is, I didn't immediately think of it that way either. However, he was asked additional questions about tests, procedures, and doctor visits. All he had to do was answer just one in the affirmative and we wouldn't even be having this discussion.

 

[walthamny]

Also legally insurance company does not have to prove the insured lied to deny a claim. They have to prove a material fact was not disclosed when asked.

 

[Robert Barney]

Also legally insurance company does not have to prove the insured lied to deny a claim. They have to prove a material fact was not disclosed when asked.

Fair enough. Sounds like you stand with the company and the consumer is of less consequence.

 

[Robert Barney]

Interesting, I thought you were a fan of jet issue?

Why would I be a fan of jet issue. Most of those products are over priced.

Also, I find this line of thought interesting. This is basically advocating, "Lies to an insurance company are fair game, but we will hold insurance companies to the strictest of standards."

Who understand the underwriting process better, and who understands the importance of the questions and the answers better. Most consumers couldn't explain why 20 year term is more expensive than 10 year term.

Now, the playing field between insurance companies and policyholders is unfair except for large businesses or wealthy and sophisticated individuals/trusts. The gap in knowledge and understanding is broad, so laws and regulations should always have a bias towards the policyholder.

They should have a big bias toward the insured.

That said, there is a world of difference between giving consumers the benefit of the doubt and not holding consumers liable for their lies, intentional or by omission.

So you are saying an omission is a lie?

And in this case, I would say the insured lied.

That sounds like what happened.

He was asked several questions in several different ways that he should have said yes to. I can get not thinking of sleep apnea as a respiratory disease. While it is, I didn't immediately think of it that way either. However, he was asked additional questions about tests, procedures, and doctor visits. All he had to do was answer just one in the affirmative and we wouldn't even be having this discussion.

All of that is quite right. But one APS to a doctor would have turned up the facts. And the facts did turn up, when the doctor was question after the claim, and not after the application. But according to you, his "ommission" was a lie, so the policy holder's beneficiary got what she deserved.

Case solved.

Too bad.

So sad.

Onto the the next sale.

It's heart warming.

 

[FinalExpenseDojo.com]

Why would I be a fan of jet issue. Most of those products are over priced.



Who understand the underwriting process better, and who understands the importance of the questions and the answers better. Most consumers couldn't explain why 20 year term is more expensive than 10 year term.



They should have a big bias toward the insured.



So you are saying an omission is a lie?



That sounds like what happened.



All of that is quite right. But one APS to a doctor would have turned up the facts. And the facts did turn up, when the doctor was question after the claim, and not after the application. But according to you, his "ommission" was a lie, so the policy holder's beneficiary got what she deserved.

Case solved.

Too bad.

So sad.

Onto the the next sale.

It's heart warming.

With fully underwritten Term, the APS is usually where I would lose the most business. Many doctors offices ignore APS requests completely OR take forever to send them in & by that time the client went somewhere else. I even had one once where the doctors offices fax machine wouldn't allow them to fax in all the required documents due to the large size. There's a gazillion things that could go wrong...

So in a perfect world things would be done with an APS every time. But by skipping the APS, the insurance company is able to issue TONS more policies. It is what it is! There are definitely more people that benefit from Jet Issue than don't.

 

[VolAgent]

Why would I be a fan of jet issue. Most of those products are over priced.

I apologize, I thought you were. Thank you for the clarification.

Who understand the underwriting process better, and who understands the importance of the questions and the answers better. Most consumers couldn't explain why 20 year term is more expensive than 10 year term.



They should have a big bias toward the insured.



So you are saying an omission is a lie?



That sounds like what happened.



All of that is quite right. But one APS to a doctor would have turned up the facts. And the facts did turn up, when the doctor was question after the claim, and not after the application. But according to you, his "ommission" was a lie, so the policy holder's beneficiary got what she deserved.

Case solved.

Too bad.

So sad.

Onto the the next sale.

It's heart warming.

I'm a little confused by this. Generally I am rather pro-consumer. The consumer is vastly out-gunned when going up against corporations. However, I find this one very hard to defend. The insured was asked 3 questions, all of which he should have answered yes to, and two were very clear. Even the third was clear if he had taken a moment to follow the hyperlink.

We expect businesses and especially insurance companies to honor the contract. In fact, we typically expect them to go above and beyond what the contract calls for. So why is it excusable for the other party to show no intent to follow the contract?

And yes, an omission is a lie if intentional. While we will never truly know, I believe this to be intentional as all three were answered no, and again two were very clear and should have been answered yes.

"within the past five years: had an electrocardiogram, X-ray or any other diagnostic test or procedure that was not previously disclosed?" (Id.) (emphasis added); or

"consulted a health care provider for any reason not previously disclosed?" (Id.)

When the insured answered these two clear questions no, he lied. Again, I can see being unclear on the respiratory if he did not follow the hyperlink. However, unless he had already disclosed the sleep studies, these needed to be answered yes. And typically I will direct an insured to answer these yes even when they have disclosed and refer back to the previous yes answers.

If you give insureds and applicants a free pass to lie on insurance applications, then don't be surprised when insurance companies return the favor at claim time.

 

[Higru]

Can you tell me what companies do jet issue with a $1,000,000 policy?

 

[Robert Barney]

With fully underwritten Term, the APS is usually where I would lose the most business. Many doctors offices ignore APS requests completely OR take forever to send them in & by that time the client went somewhere else.

That's where you have to persistently follow up and get the doctor to do the APS. If I was still selling life insurance, I would rather lose a case than have a beneficiary lose the death benefit.

 

[Robert Barney]

I apologize, I thought you were. Thank you for the clarification.

No need for an apology.

I'm a little confused by this. Generally I am rather pro-consumer. The consumer is vastly out-gunned when going up against corporations. However, I find this one very hard to defend. The insured was asked 3 questions, all of which he should have answered yes to, and two were very clear. Even the third was clear if he had taken a moment to follow the hyperlink.

I agree, he answered the question wrong. I cannot ascertain why or the motive. It makes no sense. Do you imagine that if he had said yes, they wouldn't have issued the policy? No one seems to be able to answer that.

And yes, an omission is a lie if intentional. While we will never truly know, I believe this to be intentional as all three were answered no, and again two were very clear and should have been answered yes.

Do you know if an agent was involved anywhere in the process? Was this application done on line? What did the client sign? Remember, this was an ap for $1m.

I once competed for business on a smoking client. Before he would buy from me he wanted to talk to his existing company. He called me to say they had come back with a better premium. I questioned him about it and eventually told him to go ahead and buy it but he agreed he would let me see it after it was delivered. When I got to his home, Iooked at the policy and then the ap in the back of the policy; it was checked
"non-smoker". I asked if he saw that. He said the agent, with his manager present, filled in the form and all he did was sign it. He said the agent never asked him the question, and that the agent knew he smoked because he smoked in front of him. I filed a complaint on his behalf with the regulators, nothing came of it.

When the insured answered these two clear questions no, he lied.

So for you an omission is a lie. Fine. But it doesn't matter, the omission opened the door to the policy being contestable (withing 2 years). He could have been killed by a drunk drive while he walking across the street and the policy was never going to pay.

But if you assume an omission is a lie, then you can also assume it was fraud, and the policy could have been contested (in a number of states) 5 years later.

If you give insureds and applicants a free pass to lie on insurance applications, then don't be surprised when insurance companies return the favor at claim time.

I am not giving anyone a free pass. But usually people are innocent until proven guilty. Further, life insurance applications are long, tedious documents and in my opinion should be completed with the assistance of a real live life insurance agent present. There's a reason they make you get a license and E&O insurance.