EFES Agent Lied on Monumental Application

[Newby]

They have to pay the insurance claim after two years but they can still file criminal fraud charges for up to 7-years or possibly longer.

So your claim will be paid but you may have to use it to pay a lawyer.

 

[SportsNut]

They have to pay the insurance claim after two years but they can still file criminal fraud charges for up to 7-years or possibly longer.

So your claim will be paid but you may have to use it to pay a lawyer.

So you are stating criminal charges against the agent...?

Would be tough to go after the party who made the fraudulent statement, aka decedant.
No your honor, the defendant is not SLEEPING, he is actually DEAD.

Any case law or practical knowledge of such cases?

 

[cds251]

The statute of limitation for fraud varies by state, with the majority being between 2-5 years.

All this is hypothetical: Bottom line is they would pay the claim if its after the 2 year period.

 

[VolAgent]

They have two years to find fraud, after that no. The reason is to keep the integrity of the insurance business. Other wise some insurance companies would never pay a claim. They would see fraud everywhere.

You really don't know what you are talking about, do you?

The statute of limitations starts once the fraud is discovered. As Newby pointed out, since the person who committed the fraud is now deceased, it does get more difficult. However, they can go after fraud any time. Also, leveling an accusation of fraud would be a big deal for an insurance company. Public opinion would be against them, and if it were found out they were accusing everyone of fraud to avoid paying claims, it would be a field day for lawyers around the country.

Finally, since you are not allowed to profit from fraud, I don't believe the death benefit is paid. Look at the settlement on Heath Ledger and all the lawsuits over STOLI cases to avoid paying death benefit.

Ultimately it has to make business sense for the insurance company. Fighting about fraud on a 10,000 policy five years down the road is almost certainly a money loser. Unless they really have some point they want to make, the smarter business decision is just to pay it.

 

[Newby]

So you are stating criminal charges against the agent...?

Would be tough to go after the party who made the fraudulent statement, aka decedant.
No your honor, the defendant is not SLEEPING, he is actually DEAD.

Any case law or practical knowledge of such cases?

Could be the agent or could be the estate of the deceased. In the case of a $10,000 FE, it would never happen and the estate probably doesn't have $10,000 unless there is a house.

But the COULD go after it and with large cases that are easy to prove I'm sure they do. For instance if someone knows they have cancer, goes and buys a million dollar term policy, lies on recorded interviews and hides the doctor's info that diagnosed the cancer, lives 3-years but there is a paper trail that they were told before the app and lied on tape....I would think the insurance company could sue the estate but not likely the bennys.

I'm no lawyer so I'm just thinking out loud.

 

[cds251]

Interesting.

The fraud is committed by the deceased, and they, themselves are not profiting as such so I would assume the bennys are free and clear (unless they had a part in the fraud)???

 

[VolAgent]

Interesting.

The fraud is committed by the deceased, and they, themselves are not profiting as such so I would assume the bennys are free and clear (unless they had a part in the fraud)???

Hardly. Ask the Madoff family about that, or the charities that received money from him or Stanford. They have been told to return it as the money was fraudulently obtained.

 

[cds251]

In the case of fraud, THIS is an interesting take on it.

Seems in this case, despite the intentional fraud, the carrier still had to pay out......

 

[b61mack]

You guys are missing the point. They have two years to discover any fraud.

 

[rousemark]

This keeps coming up. Misstatement of health conditions is not an item that is considered a fraudulent act that will allow a policy to be rescinded outside the incontestability provision.

A fraudulent act would be someone impersonating another person for the purpose of buying insurance, forgery, etc. In short, an act that renders the contract unenforceable or illegal at its inception.

This page describes it fairly well.

http://adelmasw.sba.muohio.edu/LIFPv2/CH%2013%20Life%20Insurance%20Policy%20Provisions/LifeInsurancePolProv.pdf

As to the possibility of a company pursuing fraud charges against an agent that knowingly participates in misrepresentation is another issue entirely. It is certainly possible but that would not affect the payment of the claim.