Ch 13 Life Claims Flashcards
claims administration
process of evaluating each submitted claim, deciding whether claim is eligible, informing individual who submitted claim of decision, authorizing payment of eligible claim
claims department
responsible for evaluating and paying claims
misstatement of age/gender provision
if discovered after death: amount payable adjusted to amount premiums paid would have purchased at correct age/sex according to premium rates at that time
if found before death: option to pay premium adjustment rather than adjust face amount. if overpaid, issue refund.
contestable period
stated period under which insurer has right to void contract and deny claim, usually 2 years from date of issue.
Can contest validity of contract after contestable period if fraudulent misrepresentation.
during lifetime of insured
phrase makes policy contestable forever if person dies during stated contestable period, no matter when claim is submitted to insurer.
exclusions to coverage
Insurer pays no benefit if death is result of activity excluded, will pay greater of premiums paid or cash surrender value. determine if claim payable, riders or basic policy
examples: aviation, avocation, travel
suicide exclusion
Protect against anti-selection. 2 years following date policy issued. If policy lapses and reinstated, still in effect from original issue date. In Canada exclusion period begins again w/ reinstated date.
waiver
act of intentionally or knowingly relinquishing or abandoning a known right, claim or privilege, either expressed or implied. Failing to act upon information it had when it originally underwrote a case can cause surrender of right or privilege to contest on that basis
express waivers
oral or written. Clear statements right is being given up.
ex. Insurer notifies insured has not lapsed policy for nonpayment even though had right to do so.
implied waivers
Created by conduct of waiving party that clearly indicates a right will not be enforced.
ex. insurer accepts late premium after grace period, waives right to lapse policy
waiver by silence
created when there is a duty to speak
ex. learns of facts showing insured is no longer disabled but continues to pay disability benefits, cannot later recoup benefits paid.
estoppel
if by your actions, words, or silence, another person has relied on or taken action that he would not have otherwise taken, to his detriment, your defense is waived and you are prohibited from later defending, denying or rescinding your original course of action.
natural beneficiary
spouse/child
non-natural beneficiary
trust/company/estate
interpleader
allows company to pay the policy proceeds to a court and ask court to determine proper recipient
ex. divorce
explainable disappearance
result of specific peril that can reasonably account for disappearance, can be presumed dead
ex. plane crash
unexplainable disappearance
need sufficient proof, 5-7 yrs before legally presumed dead, petition court for order presuming insured’s death.
Temporary Insurance Agreement
provides temporary insurance on PI should death occur before policy is issued and delivered. takes precedence over policy terms if conflict.
subject to conditions:
- coverage is temporary
- when coverage becomes effective
- conditions that must be met for coverage to become effective
- any limitations, such as amount
- when coverage will end
binding premium receipt
temporary coverage that becomes effective from time applicant receives receipt and remains in effect until earliest of following occurrences:
1. Insurer issues policy
2. insurer declines application
3. Insurer terminates or suspends coverage under the receipt
4. After specified length of time expires, 45-60 days
conditional premium receipts
specify certain conditions that must be met before temporary insurance coverage provided by receipt becomes effective
approval premium receipt
temporary coverage only when insurer approves PI as standard or better risk, If PI dies before application is approved, receipt provides no coverage. Rarely used by US
conditional premium receipts
specify certain conditions that must be met before temporary insurance coverage provided by receipt becomes effective.
2 types: approval premium receipt and insurability premium receipt
misrepresentation
untrue statement of fact on an application that is relevant to insurer’s evaluation of risk presented by PI
material mispresentation
untrue statement that affects decision on the case. can be medical or financial. material if:
1. charged an increased premium for added risk
2. excluded coverage for added risk
3. reduced amount of coverage
4. declined to issue a policy
elements required for misrepresentation
- applicant or PI failed to disclose or misrepresented a fact
- fact was w/in person’s knowledge at time misrepresentation was made
- fact was material, or relevant, to insurer’s acceptance of the risk (health, occupation/avocation, habits, traffic violations, other insurance apps denied or rated)
knowledge of agent
if agent has knowledge of facts about a PI, the insurer is considered to have that knowledge. If agent and PI engage in collusion, not imputed to insurer
collusion
agreement between 2 or more people to defraud another person of his rights
rescission
remedy provided by law to an insurer that discovers it has issued a policy based on material misrepresentation
live rescission
grounds to rescind during insured’s lifetime
policy reformation
practice of making a change to a policy contract, terms, or benefit due to information previously unknown at policy issue that has a meaningful impact to the policy
ex. misstatement of age
fraudulent misrepresentation
misrepresentation made with intent & result of inducing the other party to enter into a contract. higher level of proof needed
red flags for fraudulent mispresentation
- requesting amount of coverage slightly less than amount of coverage that would require PI to undergo exam or other requirements
- discrepancies between signature on app and other documents
- answers to app questions appear to have been altered
- Signs of speculation, PI requesting unusually large amounts of coverage based on income or amount inconsistent w/ the potential financial loss
claim fraud
action by which a person intentionally uses false info in an unfair or unlawful attempt to collect benefits under an insurance policy
International claims
-procedures for registration of death in other countries not as stringent
-death certificate or forms may be in different language
-parties attesting to death not always medical professionals or govt employees
claims payable additions
face amount
paid up addl insurance
accidental death benefits
excess premium paid in advance
policy dividends declared/not yet paid
interest on delayed claims
loan interest paid in advance
claims payable deductions
premiums due but unpaid
policy loans
interest on loans
accelerated death benefits paid
escheat
common law doctrine
