Stephi, good for you, getting out of that awful situation.
It was actually World Eater’s post that made me laugh. Any chance of burying the hatchet with your folks now that they’ve tried to declare you dead? Very funny stuff, World Eater.
Maybe you can fight some ignorance for me. I’ve always wondered if you can force an insurance company to drop a policy that is on you if you’re not the one paying for the policy? For instance, could Stephi tell the insurance company she doesn’t want to be insured by them anymore, even though its not her policy?
(Forgetting all aspects of fraud for a second) No. The insurance isn’t for the dead person, it’s an investment for the survivors. The survivors have the policy set up to protect their interests, it not set up to protect the dead person, although many people use it as an investment and cash it in for a greatly reduced rate (e.g. Dead, I’m worth $10,000. Alive, cashing in my policy would probably only yield about $2000.)
Analogy:
If I was the manager of a band and found the next Elvis, I could get an insurance policy on him because – as his manager – if he dies in one of those pesky “musicians + small aircraft = death” accidents, I lose my gravy train and my future millions are gone! If I got the policy and I’m the one paying for it, there is no way the insurance company would let New Elvis say “I don’t want to be insured because it doesn’t benefit me in any way. Cancel that policy!”
The investment is mine, New Elvis has no say. He can’t cancel a policy I’ve been paying into to protect myself financially in the event of his untimely death.
That being said, insurance companies do use some discretion when a policy is initially set up. That’s to weed out the weirdos who think “Hey, Liz Taylor’s getting pretty old. She’s gotta kick sometime soon; let’s take out an insurance policy on her!” But that’s getting the policy, not cancelling it. If I went to an insurace company and said “hi, I want to take out a life insurance policy on Saddam.” They would answer: “That’s nice. You go home now. When come back bring pie.”
If Stephi’s parents took out the policy when she was a kid, the insurance company wouldn’t have thought twice about it. It’s valid – or was they’ll probably cancel it due to fraud now.
Oddly enough, just yesterday I was researching the law of insurable interest of a life insurance beneficiary under New York law. This is not legal advice based on any particular situation, so YMMV. Also, I know nothing about how fraud would affect this, cause that wasn’t an issue in my case.
New York Insurance Law sec. 3205 defines what is an insurable interest. It provides that insurable interest is considered when the policy is issued, and subsequent changes won’t void the policy. An insurance policy taken out on a daughter (particularly if she wasn’t estranged at the time it was taken out) would probably be found to have a valid insurable interest.
Under New York case law going back to the 19th Century, if a policy-holder has held it for two years and paid premiums, then the policy cannot be cancelled. The rationale for this is to prevent insurance companies for collecting premiums for years and then denying payment after the insured died.
Under these theories, the policy should not be cancellable. As I said, however, I don’t have any idea how this would be affected by the policy owner/beneficiary trying to fraudulently declare the insured dead.
You could very well be right. I seem to recall that a fraudulent claim on the policy was reason for cancellation, but I could easily be wrong. The law might also vary by state.
I worked for Met Life, and they had a very liberal interpretation on claims. In fact, Met would honor a life insurance policy even if the insured committed suicide, as long as the policy was in force for at least two years. However, seems like I remember an instance in my office where a policy was cancelled due to a fraudulent claim. I could easily be combining two dim memories, though.
Stephi, I hope this minor hijack isn’t upsetting to you. I apologize if it is.
<hijack question> Sauron in cases of policies cancelled due to fraud – where the insurance company says “You are a naughty nitwit. We are cancelling the policy, you scammer, you!” – what exactly happens? Does the insurance company just cash it in and give you your non-dead investment earnings?
(See above where I said I’m worth $10,000 dead, but only got about $2,000 if I cash it in while alive and well.)
Or does it depend on the severity of the fraud and it all just gets seized or something?
How about pretending to be dead, and having your parents framed for your murder? You know, bleed in their cars a little, sneak a pair of your socks in with their laundry and dig holes in their back yard. Then they look like a couple of jackasses on TV when they try to protest their innocence. Meanwhile, you can be relaxing on a beach somewhere with Laci Peterson and her baby*
*i know Laci’s probably not on a beach, but i get so very mad when i think of someone hurting a pregnant woman, so i just tell myself she’s laughing at her jackass husband from a lush hotel suite somewhere
I am, of course, not Sauron, but if I remember correctly, it depends on the type of policy. If they had a term life policy on her, it has no cash value.
As for one of the various types of cash value policies, I wouldn’t have a clue where to start. I would suspect that they wouldn’t be able to keep your money, but at this point I’m just talking out of my ass.
carrot is exactly correct. Term life insurance has no cash value. Whole life insurance, and some types of a mutual fund/life insurance policy hybrid, do have cash values.
Lord knows I am not the final arbiter on all things insurance; for one thing, it’s been seven years since I tried to sell the stuff, and for another, different companies might have different policies. However, my WAG would be that if an insurance company cancelled a policy for fraud (assuming they can do so, which is still uncertain), the policy owner would be eligible to receive back the amount of money paid into the policy. It would be up to the individual company to determine if the owner would be allowed to keep any dividends the policy earned. I would imagine that type of scenario is spelled out in the actual policy.
This reminds me of the thread about Wal-Mart and other large companies taking out insurance policies on, not their key execs, but on their shelf-stockers and floor-sweepers, without their knowledge or permission.
It seems wrong to me that one can own an insurance policy on an adult, related or not, without that adult’s consent. The obvious reason being, I won’t allow you to be my beneficiary, regardless of who is paying the premiums, unless I believe I’m still worth more to you alive than dead. We can see how Stephi’s parents felt, which is why she should have been in a position to veto such a policy.
RTFirefyl don’t forget, insurance companies balk at the thought of allowing just anyone to take out a policy on just anyone else. The thread you linked to pointed out the “insurable interest” rule.
For instance, I could try to take out a life insurance policy on Cecil, but a reputable insurance company would probably say “no, get lost” because there’s no connection between me and Cecil.
If I whined and complained that Cecil’s death would cause me great suffering because of my Straight Dope addiction, then maybe (though not likely) they would relent, but the premiums would be insanely high and would destroy me.
A direct connection through family or work (as in my “New Elvis” analogy) is a more concrete connection that makes more sense as far as insurance is concerned. Example: There is a substantial life insurance policy on our CEO because if he got hit by a bus, the company would be lost.
Insurance companies do know that relationships change. People get divorced, kids grow up to hate their parents, parents get mad and disown their kids. The policies are drawn up in good faith according to the circumstances at that time. Doting parents want to leave a nest egg for their children… Awww… So I guess, in some ways they are optimistic… (while the policy waits for your death.)
Okay, so if you’re New Elvis’ manager, you have a financial interest in him. And if you’re someone’s spouse or child, you have a financial interest in them. But how does a parent have a finiancial interest in their child? Is the theory that they’re expecting their child to support their retirement, and are insuring that?
Also, are you saying that New Elvis has no say legally, or morally? Morally, I think that New Elvis absolutely has a say. I wouldn’t want my manager, when choosing which plane to fly me in, to be thinking “well, even if the plane goes down, I still make out like a bandit”. I want my manager to be be doing every thing he can to ensure my safety. Furthermore, any time anyone has a financial interest in my death, that’s my business. I mean, the insurance company is basically putting out a contract on my life! Of course that’s my business!
The Ryan, I agree completely that the new Elvis has a moral say in his insurance. But from a legal, insurance-company standpoint, he ain’t got squat. As long as the insurance company agrees that the manager has an insurable interest, that’s it.
When my children were born, I took out a cash-value insurance policy on them. My intent is not to get rich should something terrible happen; rather, I intend to give them the policies when they turn 21. It’ll be their option to cash out the insurance, or keep a policy that is basically paying for itself with dividends and have free insurance coverage on themselves worth $100,000.
I still can’t find out from the insurance company how much they insured me for, and when. They are saying the information is confidential. Don’t I have a right to know exactly how much they stood to gain?
They say that they’re going to investigate this, and if it’s found to be fraud, they will cancel the policy.
Oh well, at least she didn’t get her death certificate issued like she wanted.
Nope. You have no rights whatsoever under that insurance policy. The only one who does is the policy’s owner. Stinks, I know, but that’s the way it is.
Thank you for confirming my “cancel-policy-in-case-of-fraud” theory. I thought I remembered that, but I wasn’t sure.
