Life Insurance Incorrectly Set Up in Estate

[hdlewis]

I have had a nightmare with life insurance and was wondering if anyone could advise on the likely outcome of a complaint.

Myself and my fiance went along to a financial advisor for a firm of advisors who set up our pensions and life insurance throughout this meeting we were under the impression the insurance would be setup in each others names. This was refered too many times in the meeting with lame jokes between us and the advisor about how much we would get etc as you can imagine.

unfortunately my fiance passed away upon trying to claim the insurance it became apparent the policies had no names setup and the money went to the estate being only engaged for 7 yrs this apparently counts for nothing so I got nothing.Although I did manage to claim enough to pay funeral debts from it.

The policies were a digit apart and I have been named as next of kin by her for some little policies and things we had a joint account etc

I have started a complaint against the company I wonder is this worth my time and energy im not expecting a huge amount im just angry that I paid for something that was useless to me I think I should atleast get my money back. any advise would be great

 

[tlmarketing]

You need to speak with lawyer regarding full details...on the surface it sounds like the complaint should be against the agents who wrote the policies if they did not set the policies up correctly..typically any complaint would be filed against all the parties involved, agents, insurance company, etc...and your lawyer will push it until a settlement is reached.

 

[xrac]

It doesn't sound like this advisor was listening or that he did his job properly. The issue of beneficiary should have been discussed. The only way it should have been specified as the estate is if someone did not know who they wanted to name. I would discuss this with an attorney and then proceed from there. However, it may very well be not worth pursuing. How much did you pay in premiums? What was the face value of the policy?

 

[BNTRS]

I have had a nightmare with life insurance and was wondering if anyone could advise on the likely outcome of a complaint.

Myself and my fiance went along to a financial advisor for a firm of advisors who set up our pensions and life insurance throughout this meeting we were under the impression the insurance would be setup in each others names. This was refered too many times in the meeting with lame jokes between us and the advisor about how much we would get etc as you can imagine.

unfortunately my fiance passed away upon trying to claim the insurance it became apparent the policies had no names setup and the money went to the estate being only engaged for 7 yrs this apparently counts for nothing so I got nothing.Although I did manage to claim enough to pay funeral debts from it.

The policies were a digit apart and I have been named as next of kin by her for some little policies and things we had a joint account etc

I have started a complaint against the company I wonder is this worth my time and energy im not expecting a huge amount im just angry that I paid for something that was useless to me I think I should atleast get my money back. any advise would be great

So what this sounds like is there was no named beneficiary, which would mean proceeds are paid to the estate. That would mean the monies need to be distributed through the probate process as per her Will or through the intestate process in your state (generally a petition to the court by those who feel they have an interest in the estate). If there were outstanding debts, all creditors are paid first, and then remaining funds go to those who are either named heirs by a Will or those who petition if no Will exists.

You didn't really need that background, but hopefully if no one has pointed that out yet, you have at least time guidance on where to go to attempt and recoup as much of this money as possible.

Now to speak specifically to your question:

You (or she) had a contract that (apparently) did not name you has the beneficiary. You (or she) signed that contract, and paid premiums for that contract (probably) for several years. While it's certainly not impossible for neither of you to have no known this was the case, the insurer is likely in possession of documentation that suggests otherwise.

You could attempt to pursue some sort of indemnification from the people who set this up. It's tricky, and ultimately pushes you to a lawsuit and the worthiness of this is dependent on how large the sum of money you are going after is.

 

[scagnt83]

You have no case against the insurance company.

The agent advised you, not the company.

You signed a legal document and by singing it claimed that you read it and fully understood it. So the company is not at fault here. Legally they are not allowed to give you the money if you are not listed as the beneficiary. They would be breaking the law if they did.


But the agent/advisor is at fault here. And that is who you need to pursue here. He should have E&O insurance. You need to contact him, find out his E&O carrier, and send them a LOD (letter of demand) explaining what happened and that he made financially damaging Errors in setting up the policies. If it is a large enough sum a lawyer would probably take the case, but then you will loose 10%-20% of any claim.

If he is securities licensed or has any designations (such as CFP) you can make a complaint to the CFP board. You can also make a complaint to your states DOI.

It sounds like this guy is more of a financial advisor and not a very active insurance agent... correct? Because that is an extremely amateur mistake to make... and a huge mistake at that.

 

[xrac]

Whether it is worth pursuing will all depend upon the amount of money involved. If you do collect anything it will probably only be pennies on the dollar.

 

[DHK]

It sounds like this guy is more of a financial advisor and not a very active insurance agent... correct? Because that is an extremely amateur mistake to make... and a huge mistake at that.

Even a financial advisor should know about beneficiary designations... at least on IRAs and qualified plans.

In my view... no excuses for leaving a beneficiary designation blank without any kind of explanation or a trail of follow up to get the right kind of information.

After all, who is supposed to get the death benefit? Who is supposed to get the qualified plan balances? The beneficiaries! It's purely stupidity to leave that information blank... and be okay with it.

 

[moonlightandmargaritas]

In my view... no excuses for leaving a beneficiary designation blank without any kind of explanation or a trail of follow up to get the right kind of information.

We're making an awful lot of assumptions here without having any facts. How do you know the bene designation was left blank?

I wonder how many times the OP was offered the opportunity to review the policy? Maybe none, but those are the types that complain the loudest when something goes amiss...

 

[DHK]

Facts are relative to the OP's statements. This is a discussion forum, not a court of law.

Since there is NO GOOD REASON for why someone would WANT life insurance proceeds to go through the probate process... then we must assume that the beneficiary designation was left blank.

Can you think of a reason why someone would want any contract or account to pass through the probate process instead of by contract/beneficiary? I can't. Any advisor/agent worth their salt, can't either. Even leaving everything to a TRUST would be better than the probate process.

Yes, it is possible that the agent/advisor followed up to review and get beneficiary information. That's why having a good CRM program to record all that data is essential. At least it would show a "good faith" effort on the part of the agent/advisor to correct what could look like a serious problem.

 

[moonlightandmargaritas]

Since there is NO GOOD REASON for why someone would WANT life insurance proceeds to go through the probate process... then we must assume that the beneficiary designation was left blank.

Of course nobody would WANT the proceeds to go through probate, but I still don't ASSUME. I've learned it's dangerous! Still doesn't mean beneficiary was left blank. Perhaps a sole beneficiary that pre-deceased, with no contingent...

There's more to this saga than the OP is letting on...