My point is I think replacing for this reason is aggressive. You are right though. In a true contestable situation, this could happen. In the event that the client had actually seen a Doctor within the prior 12 months of the agent writing the policy. But if the insured had seen the doctor 13 months prior to application, or the day after seeing the agent, there would be no grounds for denying the claim. I would assume most people that youre seeing are probably approaching 2 years on their policy anways. If Im the client I'd rather have a policy paying 30% less thats been in force for 25 months in which I maybe lied on the tobacco question vs. starting over a new policy in a new contestable clause with a 30% higher premium. That's my "wisdom" on this subject.
When Agents Lie About Tobacco on the App
- Thread starter jacobtn
- Start date
My point is I think replacing for this reason is aggressive. You are right though. In a true contestable situation, this could happen. In the event that the client had actually seen a Doctor within the prior 12 months of the agent writing the policy. But if the insured had seen the doctor 13 months prior to application, or the day after seeing the agent, there would be no grounds for denying the claim. I would assume most people that youre seeing are probably approaching 2 years on their policy anways. If Im the client I'd rather have a policy paying 30% less thats been in force for 25 months in which I maybe lied on the tobacco question vs. starting over a new policy in a new contestable clause with a 30% higher premium. That's my "wisdom" on this subject.
- Thread starter
- #22
- 2,452
I don't think we disagree here. I have seen this on many policies that were 2 yrs old or nearing it. I leave those alone ... the ones I have been replacing were issued in the past 6 months. I do make it a point to ask if they smoked then and point out where the agent lied... of course the client could have lied too. I have come to discover that the older folks are less likely to lie (60+) usually the agent coaches them to do so or doesn't even tell them and lies on the app.
If a policy is 3 mths old, I am doing the client a disservice if I don't explain the contestability law and the fraud law and recommend replacing it with a legitimate app.
And I think I would probably do the same in that situation. In fact, you made a good comment about calling the company and asking them if the rate is non-smkr or smkr. Because it is frustrating when they cant find the policy and you know the rate they are saying it is sounds too good. Im going to make sure to inquire about that now, especially if it was taken out recently.
- 15,041
Somehow I just don't think it would get handled that way. Of course there is no way of knowing until it happens. You could call and ask, but I bet you are unlikely to find anyone who knows the answer.
I like this thread. You can't really control what others do. While I'm not superstitious I do believe in doing the right thing and in Karma. I don't want to go to bed with anything on my conscience. As agents we can just educate others (like Newby) and leave the decision in their hands.
- 170
My last company would just re-adjust the rate from day 1 and lower the claim face amount to what the tobacco premium would have paid - UNLESS - the death was directly tobacco disease related. Then it went to Legal for "individual consideration". I assume the size of the face amount played into it as well.
We are only focusing on the contestability issue. There is another reason that would justify replacement and that is the fact the agent lied. My attitude is if the agent lied about one thing, he would lie about another. And, if he would lie to the company, he would lie to the client. I would simply ask the client if they are comfortable with an agent that has proven he is willing to lie to make a sale.
I had a case not long ago where the agent falsified the application, on an issue other than smoking. In this particualr case, the agent did so with the client's knowledge. He explained to the client that it really wasn't a big deal and that the company really expected the question to be answered in the manner he answered it. When, I explained to her that what the agent had really done was lie on the application and had encouraged her to participate in the lie, she decided that she would rather not do business with him.
- 3,165
- 483
Slippery slope here. Say a client had a couple of cigs on New Years or a cigar during the Superbowl. Nothing since or in between. Has he used tobacco? Yes. Is he a smoker? No.
I try to advise on what could happen either way. I won't flat out lie if the guy smokes a pack a day and wants non smoking.
Related topic: On the health side, a 50% rate increase for smokers is going to create a lot of liars. How's that going to play out when COPD claims start coming in?
- 1,953
This may be way out there but does anyone know if a company will look at purchasing habits of a person at claim when something like smoking is questionable? Many people today use company cards to get discounts on their purchases which may show something like a history of buying tobacco products.
