- 11,996
There is a member on the forum that had someone "take advantage" of this system; what a tragedy. The guy bought a policy, waited like 25 months, then took his own life.
Suicide Exclusion Adter the 2 Years Policy
- Thread starter mpiazza000
- Start date
- 25,026
That is patience and determination.
I had a client asking about buying a Million more in coverage. He specifically asked me about contestability, suicide, accident and murder. I joked with him about his being a cop making him paranoid. Later that week he ate his gun at the cop shop. I delivered the $750,000.00 check.
- 1,405
I would be much more concerned about this:
Can my life insurance company deny a claim after I die?
Some bits from this article:
My problem is that "fraud" is not a reference to "criminal fraud", and given that it is left to the life insurance company to define it, I think fraud should be specifically EXCLUDED (by law) after 2 years.
Does anyone know which states permit the fraud exclusion after 2 years?
Can my life insurance company deny a claim after I die?
Some bits from this article:
In cases of fraud, life insurers can cancel coverage and deny claims at any time.
But even when honest mistakes are made in the application process, many contracts are worded so that insurance companies can immediately invalidate coverage and refuse to pay claims.
This is especially true during a policy's contestable period.
In most life insurance contracts, rights under the contestable period are not explicitly defined. The policy language focuses on when the contestable period no longer applies, which is usually after two years. Below is a simplified version of an “incontestability” provision from a Bank of Montreal life insurance policy:
“Except for fraud, we will not contest this policy after it has been in force during the lifetime of the insured person for a period of two years from the later of the policy effective date or latest reinstatement date.”
In other words, fraud is contestable after two years. But during the first two years (the contestable period), there is no limit on what can be legally challenged, and the insurance company can deny a claim for even honest mistakes.
But even when honest mistakes are made in the application process, many contracts are worded so that insurance companies can immediately invalidate coverage and refuse to pay claims.
This is especially true during a policy's contestable period.
In most life insurance contracts, rights under the contestable period are not explicitly defined. The policy language focuses on when the contestable period no longer applies, which is usually after two years. Below is a simplified version of an “incontestability” provision from a Bank of Montreal life insurance policy:
“Except for fraud, we will not contest this policy after it has been in force during the lifetime of the insured person for a period of two years from the later of the policy effective date or latest reinstatement date.”
In other words, fraud is contestable after two years. But during the first two years (the contestable period), there is no limit on what can be legally challenged, and the insurance company can deny a claim for even honest mistakes.
My problem is that "fraud" is not a reference to "criminal fraud", and given that it is left to the life insurance company to define it, I think fraud should be specifically EXCLUDED (by law) after 2 years.
Does anyone know which states permit the fraud exclusion after 2 years?
Sorry to be a tad rude but no one who has volunteered answers thus far appears to have a solid grasp of the suicide clause of a life insurance contract.
To be clear, the suicide clause is a DEATH BENEFIT. This is a rather important technical feature for contractual issues and the U.S. legal system. The death benefit happens to be a refund of premium as defined by the insurance contract (almost universal in the United States), but...for a fun fact: it's totally optional.
All 50 states have adopted statutes that limit the length of time an insurer can pay a modified death benefit with most using 2 years per the NAIC model regulation.
As I mentioned above, this is a death benefit paid, not simply a voided contract where premiums are refunded. This has significant impact on insurers and what they choose to do when faced with a covered insured's death by suicide during the suicide clause period.
If the insurer chooses to pay the death benefit under the suicide clause without attempting to void the contract by contesting it, and someone can later prove that the death was not by suicide, the life insurer backs itself into a corner and must pay the full death benefit since it chose to waive its' right to contest. As a rule, almost all insurers choose to contest even when they doubt the contract is voidable. It is in part--arguable--a fiduciary act.
To address some of the points Bob brought up:
Actually in the United States fraud is very well defined for contracts law and in order to void a contract by claiming fraud the insurer must prove that ALL conditions for fraud existed at time of application. I can't remember exactly off the top of my head, but I believe there are somewhere in the neighborhood of seven specific elements that must exist to successfully void a contract due to fraud. However, one specific element that I do clearly remember on the list is the intent to deceive. This means that inadvertently making false representations does not give the insurer grounds to void a contract under the claim of fraud.
There is no fraud exclusion. In the United States all contracts are voidable for fraud.
To be clear, the suicide clause is a DEATH BENEFIT. This is a rather important technical feature for contractual issues and the U.S. legal system. The death benefit happens to be a refund of premium as defined by the insurance contract (almost universal in the United States), but...for a fun fact: it's totally optional.
All 50 states have adopted statutes that limit the length of time an insurer can pay a modified death benefit with most using 2 years per the NAIC model regulation.
As I mentioned above, this is a death benefit paid, not simply a voided contract where premiums are refunded. This has significant impact on insurers and what they choose to do when faced with a covered insured's death by suicide during the suicide clause period.
If the insurer chooses to pay the death benefit under the suicide clause without attempting to void the contract by contesting it, and someone can later prove that the death was not by suicide, the life insurer backs itself into a corner and must pay the full death benefit since it chose to waive its' right to contest. As a rule, almost all insurers choose to contest even when they doubt the contract is voidable. It is in part--arguable--a fiduciary act.
To address some of the points Bob brought up:
Actually in the United States fraud is very well defined for contracts law and in order to void a contract by claiming fraud the insurer must prove that ALL conditions for fraud existed at time of application. I can't remember exactly off the top of my head, but I believe there are somewhere in the neighborhood of seven specific elements that must exist to successfully void a contract due to fraud. However, one specific element that I do clearly remember on the list is the intent to deceive. This means that inadvertently making false representations does not give the insurer grounds to void a contract under the claim of fraud.
There is no fraud exclusion. In the United States all contracts are voidable for fraud.
- 1,405
So I can just ignore out-of-date legal articles such as this:
http://njlegallib.rutgers.edu/journals/docs/journal.nwk.7.2.130.pdf
which says:
The incontestable clause in its simplest form provides that:
"This policy is incontestable after two years from date of issue,
except for non-payment of premium."
The object of its incorporation in life insurance policies was
to restrict the insurer to a definite time within which to discover
any fraud or misrepresentation made by the insured in
the application for insurance and to take appropriate action to
cancel the policy.
"This policy is incontestable after two years from date of issue,
except for non-payment of premium."
The object of its incorporation in life insurance policies was
to restrict the insurer to a definite time within which to discover
any fraud or misrepresentation made by the insured in
the application for insurance and to take appropriate action to
cancel the policy.
- 1,405
Let's try again:
http://njlegallib.xyztgers.edu/journals/docs/journal.nwk.7.2.130.pdf
Very weird.
After posting the link (again), the
dot rutgers
is modified to:
dot xyztgers
So, after you click on the link, change xyz to ru, and refresh.
Perhaps management can explain?
Is if possible "dot ru" is a banned substance?
- 2,207
I dont understand either
Yup, you can ignore it because there have been several court decisions since the writing of that journal article that have upheld the idea that fraud--as defined in contracts law--makes a life insurance contract voidable at anytime.
While one could argue this in court, the likelihood of winning against the insurer's favor on this is extremely low.
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