The client: A man in his early 40s, married with three children.
The case: He was insured for about $100,000. He was grossly underinsured, so we increased his coverage to about $250,000, which was the most he could afford. The insurance was a 10-year level term life. We were replacing a universal life policy that was built like a term life insurance contract.
What happened: Unfortunately, this is not an insurance success story. I had no prior knowledge that this client was depressed, but he committed
suicide shortly after obtaining the insurance coverage.
His previous policy, which we had replaced, was more than two years old. This one, because it was so new, fell under the two-year incontestability clause, and the insurance company did not honor the death benefit.
I was early in my career and delivering my very first death claim. Unfortunately, the claim was a refund of the unearned premium, and that was it.
I had to hand over this tiny check to his widow and apologize that instead of getting $250,000, or even $100,000 from the old policy, because
he committed suicide, the company would only return his premium check. The family not only lost a father and husband but was left financially
destitute.
What I learned: This is not something any of us as advisors can be ready for, and certainly not what we expect when we help better a client’s financial position. It was and still is, however, a constant reminder as to why, when we replace coverage, we need to proceed with caution.
The case: He was insured for about $100,000. He was grossly underinsured, so we increased his coverage to about $250,000, which was the most he could afford. The insurance was a 10-year level term life. We were replacing a universal life policy that was built like a term life insurance contract.
“This is not something any of us as advisors is ready for.”
What happened: Unfortunately, this is not an insurance success story. I had no prior knowledge that this client was depressed, but he committed
suicide shortly after obtaining the insurance coverage.
His previous policy, which we had replaced, was more than two years old. This one, because it was so new, fell under the two-year incontestability clause, and the insurance company did not honor the death benefit.
I was early in my career and delivering my very first death claim. Unfortunately, the claim was a refund of the unearned premium, and that was it.
I had to hand over this tiny check to his widow and apologize that instead of getting $250,000, or even $100,000 from the old policy, because
he committed suicide, the company would only return his premium check. The family not only lost a father and husband but was left financially
destitute.
What I learned: This is not something any of us as advisors can be ready for, and certainly not what we expect when we help better a client’s financial position. It was and still is, however, a constant reminder as to why, when we replace coverage, we need to proceed with caution.
