Of course I won’t bring names into it. Let’s just call her “B”. In a nutshell, this is about a lady I sold a life insurance policy to over the phone. I never met her in person.
As I said, B was a nice lady. We got along great. For some reason we had to complete the application in two sessions. It is possible I had to go to a secondary insurer as she was declined by the first. I only wish she was declined by both and all insurers. She was very pleasant to talk to. When we finished up I felt I knew her very well. Some time last year, I was notified she had died. I was shocked and saddened. I was required to fill out a form to verify some things on her application. Then they were going to investigate. I was somewhat upset. Here this poor woman died unexpectedly and her daughters were likely scrambling to find the funds to take care of things. I felt for them. Then I got word the claim was denied. I cannot say for sure but it appears B fudged some stuff on her application. If I were to guess I’d say she knew she was terminal and she was hiding it. If this was the case she tried to screw the insurance company. In the end, I was the one who got screwed. The insurance company did not pay the claim and now they are dunning me for the advance on the commission they paid me. They have every right to that money. That doesn’t make it hurt any less.
Now you might say “well, she was declined once so that should have been a clue.” To this I say yes and no. In this business, particularly the final expense field, declines are common. Surely had I been better at medically qualifying my prospects, that would have made things easier, but not always. Keep in mind I had a pretty decent script for qualifying. In fact it is one of the better scripts I’ve seen. Add to that, my own “cheat sheets” and my qualifying was reasonably thorough. Typically the biggest challenge was the prospect’s med list. Their meds were often the determining factor as to what company would be most likely to approve an application. Sometimes certain combinations were cause for a decline and these combos were not usually listed. If you think all that is complicated, welcome to my former world and I’m just showing you the easy parts. So, no, a decline is not necessarily a red flag. It is a caution, at best. The bottom line is the second app was approved.
An approval meant the client had answered the questions on the app at least twice – once with me and once with the company. (Sometimes I’d go over them again if something seemed off. In this case this was highly unlikely.) Then the company checked with the MIB (Medical Information Bureau), an organization that tracks everyone’s prescriptions and more. She sailed.
Now again, I do not know how or why this policy was eventually reversed. All I know is, it was and now I’m on the hook for what they paid me. I am screwed. I do not want to believe that “nice lady” did this to me on purpose but she, in fact, did. It could be the whole thing was a fraud from beginning to end and she never even died. Or it could be she was indeed terminal and managed to hide it. The only problem was, she didn’t last past the two year incontestability period. This second scenario is the one I suspect to be true. In this case she was scared. She may have been angry – she was far too young to die. I cannot blame her for either of these things. I’m sure she thought only the “rich” insurance company would be hurt. She was wrong on every count.
Her family was hurt if they counted on money that they would never get. Instead they would receive whatever money she’d paid in. No more. Even if they knew about the scam, they would have been hopeful. Plus, the fact that she had to resort to this likely meant there was no other money coming. Desperate people do desperate things. She wouldn’t have been desperate had she properly bought life insurance at a far younger age.
The insurance company was hurt. At the very least, it cost them time and money to investigate the claim. It may have cost them more than what I was paid. This cost is passed on to the other insureds, present and/or future, in the form of higher premiums or lower dividends or less benefits available – depending on the type of company and the policy.
Of course I was hurt. Not only did this cost me the now unpaid time and effort to secure the policy but now it is costing me actual money I’d already counted and, well, spent. The investigation was a year ago, the actual policy was issued nearly two years ago. Unless one holds a reserve for two years or has consistently robust sales then a hit like this hurts. I will say those agents who find success would not be so adversely affected unless they were terrible with their money. My own plan was to eventually convert all my commissions to “as earned” status, meaning I would not be advanced anything. Such a strategy would not likely have helped in this case as all those premiums paid would have to be returned anyway. Had she been honest with me, I could have steered her to a policy that stood a better chance at providing for her family. While the end result would have been the same, at least nobody would be accused of fraud.
While I will grit my teeth paying this money back, I’m not angry or bitter about this. Like I said, B was likely acting in fear. Fear does awful things to people. Even if she acted in total malevolence, I need to forgive her rather than hold a grudge. Dead or alive, rancor on my part only hurts me. So why post about all this?
It is both a life lesson and a life insurance lesson. B would not have found herself in this situation had she properly purchased a good life insurance in her early years. Whatever she was facing when I met her would not have been avoided but at least she would be secure in having coverage. It is possible she would have had enough cash value in the policy to help the situation. Even if she didn’t, she wouldn’t have needed to scramble to fill those financial gaps, nor would her family. From talking to B, I am convinced she loved her family very much and wanted the best for them. Had she taken action sooner, at least that wish would be closer to fulfilled.
Unless you too are terminal, there is still time to act. In fact, even if you ARE terminal, you can still take out a “guaranteed issue” policy. A good one will pay something out even if you die a year from now. For those with lessor or no health issues, the sooner you secure coverage the better off you and your family will be. The healthier you are the more insurable you are. And if you are young and healthy, there are even more sound reasons to buy life insurance now rather than later. In fact the most important reason comes into play not if you happen to die unexpectedly but if you end up living a long, long time!
The best way you can help yourself is by reading my book “Life Insurance ‘Dirty Little Secrets’ for Consumers Revealed!” before you look for a policy. It will help you navigate the shallow spots and avoid being “sold” something you really don’t need. Instead it will help you seek out a policy that will give you the best bang for your buck and still be affordable. Don’t be like B and wait until the worst happens. Start out now by informing yourself so you can take decisive action and be done with it.