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If you check the insurance statutes in most states, you'll find this to be true...
It all depends though, on the size of the death benefit. With the cost of investigating and proving fraud, sometimes it's just cheaper to pay the claim.
This Sounds "Clean-Sheeted" to Me...
- Thread starter Rearden
- Start date
It all depends though, on the size of the death benefit. With the cost of investigating and proving fraud, sometimes it's just cheaper to pay the claim.
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nfl72 said:
That MIGHT be true if they completely stole someone else's identity or something. They can also adjust for incorrect age. They absolutely can not refuse to pay over health misrepresentations after 2-years. You could have AIDS, CHF, cancer, and be in a diabetic coma and if they issue the policy and don't catch their problem during the first 24 months, they absolutely have to pay the claim exactly as written.
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Scott, I respect your experience and perspective, but your statement is just not true. In just about every state in the U.S., fraud - outside of the 2 year "contestable period" is a basis for denying claim. Proving it is a completely different issue.
"Finally, some incontestability clauses contain a Fraud exception. Such a clause might read, "After two years from the date of issue of this policy, only fraudulent misstatements made by the applicant may be used to void the policy or deny a claim that commences after the expiration of the two-year period."
Generally, fraud is a false representation calculated to deceive another into acting against her or his legal interest. Statements that are inaccurate but made without the intent to deceive are not fraudulent. The difference between fraud and simple misstatement can only be found in the facts of a particular case.
In Paul Revere Life Insurance Co. v. Haas, 137 N.J. 190, 644 A.2d 1098 (1994), the Paul Revere Company brought an action against Gilbert K. Haas, when it discovered that Haas had made false statements in his insurance application. Haas had received a policy on March 5, 1987, and on December 1, 1990, started a claim for disability payments related to a progressive eye disease. The company sought to rescind the policy or to secure a Declaratory Judgment from the court that the policy did not cover Haas's disease."
Incontestability Clause legal definition of Incontestability Clause. Incontestability Clause synonyms by the Free Online Law Dictionary.
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Life insurance is different. If the person is two years and one day into the policy the claim HAS to be paid. There are NO exceptions. The person could even leave a note stating that they scammed the insurance company. It wouldn't matter. It's completely non-contestible.
I do think the insurance company could try to sue the estate for fraud but that wouldn't recover the actual claim because life insurance bypasses the estate (as long as there is a living named beneficiary.)
I do think the insurance company could try to sue the estate for fraud but that wouldn't recover the actual claim because life insurance bypasses the estate (as long as there is a living named beneficiary.)
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Suicide after 2 years?
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TPAAgent said:
How many times are you going to ask this question? The more you ask the more uncomfortable I get.
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Fraud can go beyond two years especialy when it comes to 'bad insurable interest' when the contract was taken out as far as I'm aware and from what I've read.
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Can someone give even one example of a FE policy that wasn't after being in force for 2 years?
If there is no penalty for lying on an application after two years the client might as well lie to get approved. If he is not able to get a level policy, without lieing, he has nothing to lose as he is going to get a ROP. if he dies within two years most of the time anyway
