Death Claim Concerns

[jdeasy]

I think I'll hook up with Accendo. Sure will save time going over my commission statements.

Right. There won't be any. No commissions on declined apps.

 

[titeye]

I’ve never known LBL to have an automatic premium loan provision. This policy effectively lapsed due to nonpayment. Because there was cash value at the time of lapse, it went to ETI instead of terminating. The ETI face amount was based on the death benefit that would have been payable at the time the policy moved past the grace period, which was still within the 3 year modified period. The company did everything it was obliged to do under the contract. I wouldn’t dismiss LBL for this case. They’re actually one of the better companies at claim time, in my experience.

If I had been speaking with the beneficiary, I would have explained that their mother did NOT take out a $3k policy, but that the company was paying this benefit even though she had not paid her premiums for several months.

I like and appreciate everything you just said. I specifically asked them if the policy had lapsed, and they said, "No." I accepted that as being accurate, since the policy had enough cash value to make a premium payment. If LBL does not have a an automatic premium loan provision, what you said makes a lot more sense to me and is an acceptable explanation. I may have mistakenly thought LBL was one of the carriers that offered that provision.
I am not placing the responsibility for my ignorance on them. My initial discomfort came about after being told the client was not in her 4th policy year, as a result of missed payments and the lack of making 48 payments. I couldn't hear too much of anything else after that.

 

[titeye]

Thanks to all of you for your responses. This reminds me of when my coaches used to take me out the game and sit me on the bench until they felt I was ready to go back in. Well, LBL, be ready when I call you off the bench. If it were not for you assistant coaches, LBL would have been cut from the team!

 

[DonP]

Columbian does not if the automatic premium loan box is checked on the app. However, Extended Term Insurance is pretty much the default no forfeiture option industry wide. I had two claims pad on ETI with Columbian last year. Paid full face as they should have.

Had one paid on reduced paid up insurance.

I wrote only young peoples Gi with them 6-10 yrs ago and they didn’t have that APL options . Wrote a few 30 yr level terms as there rates for smoker and non smoker was the same and table 4 underwriting

 

[Allen Trent]

ETI is the standard default non forfeiture option of most WL policies in the industry unless you pro actively place Automatic Premium Loan on the policy, if available or if you proactively elect reduced paid up prior to the lapse for non payment.

This policy lapsed for non payment & the CV was used to buy term for extended period. Client could have possibly reinstated, but may have required insurability.

Always mark the Automatic Premium Loan if it is offered on the app.

Lastly, do you receive or can you see in the carrier documents the letter that went to the client when it lapsed & became extended term? That would be a good document to be able to show the bene of what occurred

 

[scagnt83]

My point was that the agent does not have a policy at the point of sale.

This is why the free look period exists. It is a period of time for the insured (and agent) to review the contract and decide they want to accept it.

There are other features of life insurance that are not disclosed at point of sale.

UL/IUL have current expenses that are disclosed, but guaranteed expenses that are only shown on the contract.

The "logic" is that there are too many small features to a complex financial contract that it becomes burdensome to the consumer if they are swamped with too much info.

However, states dictate that certain features must be disclosed prior to sale.

If I were you, Id call the state DOI and find out if this feature is required to be disclosed on sales material. If so, give that code of law to the carriers compliance department. (Id be speaking directly to compliance about this situation if it were me)

 

[goillini52]

ETI is the standard default non forfeiture option of most WL policies in the industry unless you pro actively place Automatic Premium Loan on the policy, if available or if you proactively elect reduced paid up prior to the lapse for non payment.

This policy lapses for non payment & the CV was used to buy term for extended period. Client could have possibly reinstated, but may have required insurability.

Always mark the Automatic Premium Loan if it is offered on the app.

Lastly, do you receive or can you see in the carrier documents the letter that went to the client when it lapsed & became extended term? That would be a good document to be able to show the bene of what occurred

I've always marked APL.

 

[Life Hawk]

@titeye, I feel your frustration. It's very difficult when we are placed in an awkward situation between the company and our clients. It can give you the strange feeling you didn't do your job correctly and make you feel like you failed someone.

You did your job and you didn't fail your client or thier beneficiary. They alone are responsible for paying the premium and keeping thier policy in good order.

Wish you the best, go be an angle on someone else's porch.

 

[HoosierLife]

Always marked APL. I assume the failed agent didn’t do that?

 

[WinoBlues]

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?

OK, I haven't read the thread yet - however, Bullshit! The effective date is day 1, if the had APL marked on the app or it is the default, the CV keeps the policy going at full face amount until it reaches zero. ETI / Extended Term Insurance is full face amount until xxx years, months and day.

Sounds more like RPU.

This sounds like a company named after a financial institution.