My first policy is rescinded

billyb

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2,172
Florida
In my 41+ years in this business I have never had a company rescind a policy and deny the death claim. Wrote a lady with Columbian almost 2 years ago. Remember completing the PHI and she was issued level. Died about 3 months ago and the funeral home refused to accept the policy. Said the policy would not pay so the daughter had to. When she called me I explained how all policies are contestable for 2 years, but assuming she was truthful the claim would be paid. Just received an e-mail about 5 telling me their decision. Looks like the funeral home had dealt with Columbian before. I am disappointed. Has any else had the same thing happen to them? Does Columbian usually pay when the death occurs within 24 months of the issue date?
 
I have not had any claims denied. I have had 6 payout and have two pending now. (One died on effective date)

Columbian doesn't have the best reputation on these mattera
 
Every single company tries this stuff so I’m always apprehensive to replace
That's my biggest beef with agents that do a lot of replacements. Yeah. Maybe you can get them a little more coverage for the same $. Yeah. Maybe you can get them a lower premium for the same coverage. Yeah. Maybe you can get them a nice check from the cash surrender so they can fix their teeth or whatever. But if the policy you wrote gets rescinded, what are you gonna get their family?

This is fresh in my mind because of a situation that came up yesterday. I wrote this lady up a week ago. She had enough coverage for funeral expenses, but wanted a small policy to leave a little cash for her nephew. I reviewed her existing policies, and could have replaced some of her existing coverage easily enough. But it was out of contestability, so I left it alone, as is my rule.

She died Thursday night, apparently from a heart attack. When I wrote her, I noticed that one of her meds is a common one for CHF, but is also frequently used for hypertension. When I asked her about it, she said she had never been diagnosed for CHF, and was taking it for blood pressure. She got through the phone interview fine and the policy was approved. I got it yesterday and called to set up the delivery. Her nephew picked up the voicemail & called to tell me the sad news. We're going to submit the claim, and hopefully the company pays it. But I'm so glad I didn't replace anything!
 
Agreed, it’s tough to walk on what looks like a sale. But, we have to remeber these are people to and not just annualized premium. I did a whole ‘training’ called “sometimes the right thing to do is not the easist thing to do.” Around this whole issue.
 
That's my biggest beef with agents that do a lot of replacements. Yeah. Maybe you can get them a little more coverage for the same $. Yeah. Maybe you can get them a lower premium for the same coverage. Yeah. Maybe you can get them a nice check from the cash surrender so they can fix their teeth or whatever. But if the policy you wrote gets rescinded, what are you gonna get their family?

This is fresh in my mind because of a situation that came up yesterday. I wrote this lady up a week ago. She had enough coverage for funeral expenses, but wanted a small policy to leave a little cash for her nephew. I reviewed her existing policies, and could have replaced some of her existing coverage easily enough. But it was out of contestability, so I left it alone, as is my rule.

She died Thursday night, apparently from a heart attack. When I wrote her, I noticed that one of her meds is a common one for CHF, but is also frequently used for hypertension. When I asked her about it, she said she had never been diagnosed for CHF, and was taking it for blood pressure. She got through the phone interview fine and the policy was approved. I got it yesterday and called to set up the delivery. Her nephew picked up the voicemail & called to tell me the sad news. We're going to submit the claim, and hopefully the company pays it. But I'm so glad I didn't replace anything!

Great story. Had something some what similar about 2 months ago. Placed a lady with RNA, approved, and then she got a mailer from Mutual of Omaha guaranteed, and of course their plan was a little cheaper but had 2 year waiting period.

client understood this, and said she talked with her daughter, and they both know she wasn't 'going to go anywhere' in two years. I wished her all the best, and said it probably wasn't a good decision.

Said Daughter calls 1 week ago, asking about the death claim process for Royal Neighbors, and had to remind her that they 'replaced' the immediate death benefit policy with a cheaper one that doesn't pay out death benefit for two years.

She was speechless, as I gave her the number to MOO to get the premiums refunded.
 
Yeah, I think there might be some information missing here. I don't know of ANY carrier that pays a claim within the 2-year contestable period unless death was clearly caused by an accident. The reality is our clients don't always tell the complete truth...and we all know some agents like to tweak the truth for a quick buck. The contestability clause is only there to protect the carrier, and they're simply exercising their right. Every applicant agrees to this when they signed the application. I'm not advocating in favor of carriers, but I don't blame them. I've experienced several client claims that were not paid, and in every case it was due to "material misrepresentation" by my clients. I've also seen a few surprising cases where the carriers PAID the claim even when there was enough evidence that they could have denied it. I'm curious though...why do you say "looks like the funeral home had dealt with Columbian before"?
 
Does this discussion mean that there are some final expense policies that do not have a contestability period?
 

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