A beneficiary filed a claim upon the death of a parent. The client had missed a few premium payments at the time of death. There was a sufficient amount of cash value to keep the policy in force, which activated the automatic premium loan provision The face value of the policy was $15,000. The beneficiary received a death benefit of approx. $3,300. Beneficiary stated to the agent, "My mom would have never bought a life insurance policy for only $3,000."
My initial thought was that the carrier returned the premiums, plus interest. However, this Modified issued policy was beyond its 3-year waiting period. The marketing material states specifically that full benefits are payable beginning in the policy's 4th year. A CS representative for the carrier attempted to make me believe that 48 months of payments were required before it would pay full benefits. Me: "Why, if full benefits are payable beginning in, not after, the 4th year?" She further stated that the number of payments is what determines the policy year. Therefore, because the client missed a few payments, she wasn't really in the 4th year. Me: WHAT DID YOU JUST SAY!!!?
Obviously, I had to request to speak to someone whom I thought knew what they were talking about. They must have thought I would just go away. After waiting for about a week, I called back to speak with the manager, whom I was expecting to call me within a couple of days. Upon further investigation, he says the policy automatically defaulted to ETI (extended term insurance), when the client stopped making premium payments. The manager referred both, the agent and beneficiary, to the policy for this information. Nowhere in the Agent Guide, marketing material, application or any other material accessible to the agent does it state nor suggests this will be the result of nonpayment of premiums. In addition, I have never ever heard of an agent receiving a copy of a life insurance policy for training purposes, nor to use at the point of sale. This led me to begin questioning whether or not I had been misleading my own clients all these years, unknowingly.
As a result, I reach out to all my other carriers confirming my understand of how policies should pay out, in the event of missed premium payments and loans against the cash value. With the exception of this one carrier above, all of the others "said" the policy would pay the face amount, less the amount of loans via missed payments. This is not only the response I expected to hear, but also what I have been telling my clients for years.
Needless to say, I was quite taken aback by this carrier and do not feel comfortable selling them any longer. As I stated above, this ETI info is nowhere in the Agent Manual or any other material used at the point of sale. Let alone the fact that they have representatives attempting to convince people that policy year anniversary is dictated by the number of payments sent in or date payments are received, and not actual date the policy issued.
Am I guilty of overreacting due to my own ignorance?
Is anyone else selling policies by either, presenting a sample of an actual policy or what is written in the policy, versus what is provided in the product guide, Agent Manual, etc?
The policy never lapsed and never entered a grace period. Considering there was cash value sufficient to keep the policy in force, what am I missing?
My initial thought was that the carrier returned the premiums, plus interest. However, this Modified issued policy was beyond its 3-year waiting period. The marketing material states specifically that full benefits are payable beginning in the policy's 4th year. A CS representative for the carrier attempted to make me believe that 48 months of payments were required before it would pay full benefits. Me: "Why, if full benefits are payable beginning in, not after, the 4th year?" She further stated that the number of payments is what determines the policy year. Therefore, because the client missed a few payments, she wasn't really in the 4th year. Me: WHAT DID YOU JUST SAY!!!?
Obviously, I had to request to speak to someone whom I thought knew what they were talking about. They must have thought I would just go away. After waiting for about a week, I called back to speak with the manager, whom I was expecting to call me within a couple of days. Upon further investigation, he says the policy automatically defaulted to ETI (extended term insurance), when the client stopped making premium payments. The manager referred both, the agent and beneficiary, to the policy for this information. Nowhere in the Agent Guide, marketing material, application or any other material accessible to the agent does it state nor suggests this will be the result of nonpayment of premiums. In addition, I have never ever heard of an agent receiving a copy of a life insurance policy for training purposes, nor to use at the point of sale. This led me to begin questioning whether or not I had been misleading my own clients all these years, unknowingly.
As a result, I reach out to all my other carriers confirming my understand of how policies should pay out, in the event of missed premium payments and loans against the cash value. With the exception of this one carrier above, all of the others "said" the policy would pay the face amount, less the amount of loans via missed payments. This is not only the response I expected to hear, but also what I have been telling my clients for years.
Needless to say, I was quite taken aback by this carrier and do not feel comfortable selling them any longer. As I stated above, this ETI info is nowhere in the Agent Manual or any other material used at the point of sale. Let alone the fact that they have representatives attempting to convince people that policy year anniversary is dictated by the number of payments sent in or date payments are received, and not actual date the policy issued.
Am I guilty of overreacting due to my own ignorance?
Is anyone else selling policies by either, presenting a sample of an actual policy or what is written in the policy, versus what is provided in the product guide, Agent Manual, etc?
The policy never lapsed and never entered a grace period. Considering there was cash value sufficient to keep the policy in force, what am I missing?
