Insurance Company Issued Incorrect Illustration to Client.

[redsimpatico]

Please note in some policies when surrendered the surrender value is less than the guaranteed cash value due to surrender charges. Please read the illustration and policy provision and be sure to look at all elements that are guaranteed and those that are not. The key elements that affect the policy value over time are the insureds age, policy cost and rate of return within the policy. Typically, when policy cost increase above what is illustrated within the policy or the internal rate of return is lower than illustrated it cause an issue with the consumer because assumptions are mistaken for policy guarantees.

How can trust any illustrations if this is true, especially trust policies?
You can typically trust an illustration and policy provision. These policy documents must be read carefully as illustrations may list guarantees as well as assumptions. And misinterpreting one for the other can cause serious issues.

Wouldn't the insurance company be liable for the discrepancy? if so, how?
Yes, the insurance company may be liable for its errors, omissions, and misrepresentations.

How does an insurance agent protect himself from this?
The best way to protect your self is first to understand the policy you are selling and explain honestly and correctly to the client. Be sure to maintain a client file with financial planning questionnaire outline the client circumstances and his or her goal and objectives and what your recommendation to the client is. Taking all these steps may not prevent you from getting sued and errors do occur so be sure to maintain an errors and omission policy. Doing the right thing for the client and having the facts documented will help in an investigation.

 

[DHK]

file a complaint with the Dept of Banking and Insurance

My, my, my... aren't WE just a little quick with the trigger.

 

[WinoBlues]

My, my, my... aren't WE just a little quick with the trigger.

That's what she said

Sorry.

 

[DHK]

This issue based on what has been stated has cause material loss to the client.

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An illustration insurance contract provides guaranteed elements any errors omissions will cause harm to the client and harm an agent reputation. The agent and the client relied on what was stated in the illustration.

As said earlier in the thread: An illustration is NOT the same as a policy statement.

I think you should stick to asking questions than giving incorrect assumptions.



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Actually, you should FORGET about asking questions. This is too much for you.

https://www.nologist.com/users/redsimpatico

 

[walthamny]

None of us are lawyers here but basically if the insurance company makes an error and sends out a statement saying the death benefit is 700 billion dollars instead $7000 where the monthly premium is $10 a month, the insurance company would not be liable for 700 billion, a judge would easily correct this as an error. In the business world, it is expected not all the documents are going to be perfect.

You can sue for emotional distress and whatever reason you wish.

Now when I print a VUL illustration, I do not check line by line, word by word if everything is correct. I also don't check line by line every mutual fund prospectus I have delivered. I don't even check software license agreements when I buy some software, I prefer to spend my time to argue with my wife. But I do have a good error and omission policy, and I actually have read most of it before buying it. It protects me from non sense errors like this.