MomsRules

Is your family protected? Life Insurance

I went though a dozen calls today with several insurance companies in a matter where a single father of a minor child had died and left an tangled web of an estate plan. 

The father had purchased life insurance, but not any kind of life insurance; Accidental Life Insurance.   He had actually died of an accident.   

Here are all the problems we had to deal with in taking care of his estate:

1.   His sister couldn't find the policies.

2.   His sister couldn't verify the last date of premium payment.

3.   His sister didn't have canceled checks to show premiums were paid.

4.   He had named his minor daughter as a beneficiary.

Four insurance companies claimed that his insurance had lapsed, but could not provide the necessary information to verify the lapse.   

How could this have been avoided:

a.  A life insurance file with all the policies.

b.  Copies of method of payment and how payments were being made.

c.  Purchasing a rider which prevents a lapse in policy in the event of incapacity.

d.  Automating payments of life insurance and accidental insurance payments.

e.  If you have a minor beneficiary, create a minor's trust and name that trust as a beneficiary instead of the minor.

Mina N. Sirkin is a Family Wealth Lawyer and a TV Legal Expert in Los Angeles, California.   Ms. Sirkin is a Board Certified Specialist attorney in Estate Planning, Probate and Trust Law by the State Bar of California.  MSirkin@SirkinLaw.com.  http://www.SirkinLaw.com. 

Your Money or your Life Insurance: Heath Ledger

Your husband did the responsible thing, created a trust, and bought life insurance for you.   One would think that life insurance companies will do the right thing and pay when the claim is made.   Well, not so fast.

In the case of Heath Ledger, his trustee has filed an action against Reliastar for failing to pay on a $10M insurance policy Ledger bought.   The life insurance company can claim any number of reasons not to pay on the policy.  For example, they can claim that Ledger simply lied on his insurance application, failed to disclose that he may or may not have had a psychiatric condition which required treatment, or simply that Ledger may have attempted suicide!!!  In either of those cases, most insurance companies will deny the claim.

Most people lack the experience to document their communication or conversations with insurance agents and claims adjusters.   This can create may situations where the insurer may claim that they were not advised of medical conditions which would affect the policy risk.

If you are buying insurance, be sure to detail ALL of your medical conditions in your application if it requires it.  Then, document all correspondence, email and telephone conversations with the agent and any other person who is related to the insurance company who talks to you when you are about to purchase a policy.    Detail all of the medications which you are taking or have taken in relations to your medical condition and disclose it to the agent and in the application.   Barring all that, there is a lot of room for denial of the insurance claim.

Most trustees or executors should expect that if death occurs in the first year of the policy, that the policy will be investigated for misrepresentation by the insured.    If you are the insured, a beneficiary, or a trustee or executor, make a policy file and keep all records in the file, including a copy of your beneficiary designation.

If you have purchased accidental life insurance, be sure to document HOW you paid for it, and be sure to set up automatic payments from your account so that the policy is in place.

Mina N. Sirkin is a Family Wealth Lawyer in Los Angeles, CA and a TV Legal Expert.   Ms. Sirkin is Board Certified as a specialist attorney in Estate Planning, Probate and Trust Law by the State Bar of California.  MSirkin@SirkinLaw.com.  http://www.SirkinLaw.com