MIB Plan F - Anti Stacking of Policies

[Rearden]

Don -- because it's a shady way of doing business, and will cause the 20 percent that does 80 percent of the business to go elsewhere.

Carriers shouldn't be focused on renigging -- they should improve initial underwriting, include a script check, tighten underwriting, and even increase premiums to adjust.

Otherwise, what's the point of approving any policy?

 

[VolAgent]

First they have to have a reason to rescind. Having multiple SI policies is not necessarily a reason. There has to be a material misstatement on the application.

If a company has a policy not to participate if there is more than X in life insurance on the person, then they would have a reason. They could even have a policy of no more than Y in simplified life insurance. But they would have to ask to be able to rescind on that basis.

If they don't ask, they can't rescind. Otherwise they just open themselves up to a lawsuit. Just to pick on a company, Royal Neighbors of America. They don't ask about bi-polar or schizophrenia even though there are some companies that do. The person's schizophrenia could easily lead to the person's death inside of 24 months and as long as it wasn't suicide, they could not rescind on that basis. Now, if they find another health condition that was covered by their questions, that is a different story.

 

[donamese]

Don -- because it's a shady way of doing business, and will cause the 20 percent that does 80 percent of the business to go elsewhere.

Carriers shouldn't be focused on renigging -- they should improve initial underwriting, include a script check, tighten underwriting, and even increase premiums to adjust.

Otherwise, what's the point of approving any policy?

One could say it's a shady way of doing business and another could say its a means of catching shady people that effect the business. The only people affected are the ones that are the ones that gamed the system. The carrier isn't renigging, they made a contract stating that so long as the above is true then we will do X. If you lied on the application, then you voided it...no different than had they died in the first 2 years. I still hear agents looking for companies that don't do script checks...why would you want that? So you can stare at a cabinet full of meds and say no medical conditions!

If a carrier increases premiums because they are accounting for the few cheaters...everyone is now effected by the rate increase rather than the select few that inflate the claim costs through deceit.

 

[newtothegames]

One could say it's a shady way of doing business and another could say its a means of catching shady people that effect the business. The only people affected are the ones that are the ones that gamed the system. The carrier isn't renigging, they made a contract stating that so long as the above is true then we will do X. If you lied on the application, then you voided it...no different than had they died in the first 2 years. I still hear agents looking for companies that don't do script checks...why would you want that? So you can stare at a cabinet full of meds and say no medical conditions!

If a carrier increases premiums because they are accounting for the few cheaters...everyone is now effected by the rate increase rather than the select few that inflate the claim costs through deceit.

no script chx more sales DUH!

 

[jdeasy]

One could say it's a shady way of doing business and another could say its a means of catching shady people that effect the business. The only people affected are the ones that are the ones that gamed the system. The carrier isn't renigging, they made a contract stating that so long as the above is true then we will do X. If you lied on the application, then you voided it...no different than had they died in the first 2 years. I still hear agents looking for companies that don't do script checks...why would you want that? So you can stare at a cabinet full of meds and say no medical conditions!

If a carrier increases premiums because they are accounting for the few cheaters...everyone is now effected by the rate increase rather than the select few that inflate the claim costs through deceit.

In a perfect world you would be right but we ain't in a perfect world. To me this is more about gredy companies than dishonest agents.

I've companies not pay contestable claims for something that was not asked on the application.

I had one underwriter at a company laugh about recissions and said they call it the "50/50 gamble" there in the office.

Then I had another one at a different company tell me that I should never tell prospects that coverage is "immediate" because of the contestable period. I told her that I would telling people when they stopped plastering it all over their client brochures.

 

[donamese]

In a perfect world you would be right but we ain't in a perfect world. To me this is more about gredy companies than dishonest agents.

Don't forget the clients. They lie inadvertently due to lapse of memory or just intellect but I have had numerous lie deliberately in hopes that the insurance company didn't find out. Oxygen tanks in the corner, or an ashtray full of butts on the table but those are just their friends that come over. While it is easy for us agents to call the company greedy...they have quite a bit more skin in the game than we do. Do you think agents would willingly fork over 10K from their pocket to someone who lied to them? It's always easier to spend other peoples money...look at the government!

 

[rousemark]

One could say it's a shady way of doing business and another could say its a means of catching shady people that effect the business. The only people affected are the ones that are the ones that gamed the system. The carrier isn't renigging, they made a contract stating that so long as the above is true then we will do X. If you lied on the application, then you voided it...no different than had they died in the first 2 years. I still hear agents looking for companies that don't do script checks...why would you want that? So you can stare at a cabinet full of meds and say no medical conditions!

If a carrier increases premiums because they are accounting for the few cheaters...everyone is now effected by the rate increase rather than the select few that inflate the claim costs through deceit.

There is no requirement for interest to be paid on the premium if rescinded for cause. This 23rd month review opens it up for companies to intentionally be lax in underwriting pre-issue, issue the policy, then "review it" at 20 months, cancel it.. refund premiums paid, charge back 100% of the commissions paid and pocket the interest made on those premiums. Sure, the interest on a $50.00 ABC premium will be very little but multiply it by a few thousand and it starts to add up.

 

[VolAgent]

There is no requirement for interest to be paid on the premium if rescinded for cause. This 23rd month review opens it up for companies to intentionally be lax in underwriting pre-issue, issue the policy, then "review it" at 20 months, cancel it.. refund premiums paid, charge back 100% of the commissions paid and pocket the interest made on those premiums. Sure, the interest on a $50.00 ABC premium will be very little but multiply it by a few thousand and it starts to add up.

The cost of medical records will destroy the interest earned.

 

[donamese]

There is no requirement for interest to be paid on the premium if rescinded for cause. This 23rd month review opens it up for companies to intentionally be lax in underwriting pre-issue, issue the policy, then "review it" at 20 months, cancel it.. refund premiums paid, charge back 100% of the commissions paid and pocket the interest made on those premiums. Sure, the interest on a $50.00 ABC premium will be very little but multiply it by a few thousand and it starts to add up.

Not sure of the cost for an MIB report but I would guess the interest made there is not enough to cover the cost of the additional MIBs and the commission chargebacks that do not get paid back. I would think you run MIB on all the policies and only review/then rescind ones with certain flags. I would think these rescissions are fairly small in number say 2%....2,000 MIBs ordered and only getting interest from 40 policies. Seems like if that was the intention, it is a lot of work for little return if any.

 

[jdeasy]

Don't forget the clients. They lie inadvertently due to lapse of memory or just intellect but I have had numerous lie deliberately in hopes that the insurance company didn't find out. Oxygen tanks in the corner, or an ashtray full of butts on the table but those are just their friends that come over. While it is easy for us agents to call the company greedy...they have quite a bit more skin in the game than we do. Do you think agents would willingly fork over 10K from their pocket to someone who lied to them? It's always easier to spend other peoples money...look at the government!

I agree with that and I have been lied to plenty. The case Newby talked about in another thread where where the agent had the sister do the phone interview was a case I stumbled across. Yes the sister was lying as was the agent. He will probably claim he didn't know but both sisters we present and has the first sister as a client already.

I don't think he will get the chance to defend his action because the lady does not want to proceed with a complaint seing how she was also a part of the fraud. They did cancel the policy.

Still, the insurance makes the rules and we are to simply follow them.There is something fundamentally wrong with changing those rules after issue.

There is a reason that companies will not make it public as th percentage of rescinded policies. Only on I know of tat will give that out is Settlers.