by MaxHerr » Tue Dec 08, 2009 02:50 am
There's a little disagreement over the subject of who must sign a life insurance application and related forms necessary to complete an application for insurance (such as HIPAA consents, HIV testing, etc.).
An otherwise anonymous poster on another thread would like to insist that he can obtain $1,000,000 of life insurance on a proposed insured without the knowledge and consent of the proposed insured.
My contention is that whether it appears explicitly in the insurance code of a particular state or not, in the law of contracts requires the parties to the contract to sign the contract in order for it to be legally in force. Since the insured is a party to the contract, whether he likes it or not, he must answer the various questions in the application (or supply the requested personal information) and attest to their accuracy being "true and complete to the best of my knowledge" (a representation). A third-party owner signs the application to acknowledge his insurable interest, which is a requirement of most if not all Insurance Codes.
Most insurance codes, if not explicitly referring to the insured, infer equivalency between the term "applicant" and "insured". For example, the California Insurance Code (799.03) requires that [for life and disability income insurance] "(a) An insurer that requests an applicant to take an HIV-related test shall obtain the applicant's written informed consent for the test. Written informed consent shall include a description of the test to be performed, including its purpose, potential uses, and limitations, the meaning of its results, procedures for notifying the applicant of the results, and the right to confidential treatment of the results. Prior to the applicant's execution of the consent, the insurer shall:
(1) Provide the applicant printed material describing HIV, its
causes and symptoms, the manner in which it is spread, the test or
tests used to detect HIV or the HIV antibody, and what a person can
do whose test results are positive or negative.
(2) Provide the applicant a list of counseling resources
available, where the applicant can obtain assistance in understanding
the meaning of the test and its results. The list may be provided
from publicly available information.
It is clear from the context, that the Code is referring to the insured, not a third-party applicant/owner whose insurability is not in question. We know that insurers have, for the most part, incorporated such consents within the application, or in additional forms that are made a part of the application. No signed consent, no insurance. Unless the insurance amount is small, say $50,000 or less, the majority of insurers utilize saliva, blood, or urine testing for HIV/AIDS.
Various state and/or federal laws also require informed consent of the insured under a COLI/BOLI policy applied for by their employer, particularly when the beneficiary will be the employer and not a person of the insured's choice, such as when the policy is being used to informally fund a nonqualified employee benefit plan.
Please share your thoughts.
An otherwise anonymous poster on another thread would like to insist that he can obtain $1,000,000 of life insurance on a proposed insured without the knowledge and consent of the proposed insured.
My contention is that whether it appears explicitly in the insurance code of a particular state or not, in the law of contracts requires the parties to the contract to sign the contract in order for it to be legally in force. Since the insured is a party to the contract, whether he likes it or not, he must answer the various questions in the application (or supply the requested personal information) and attest to their accuracy being "true and complete to the best of my knowledge" (a representation). A third-party owner signs the application to acknowledge his insurable interest, which is a requirement of most if not all Insurance Codes.
Most insurance codes, if not explicitly referring to the insured, infer equivalency between the term "applicant" and "insured". For example, the California Insurance Code (799.03) requires that [for life and disability income insurance] "(a) An insurer that requests an applicant to take an HIV-related test shall obtain the applicant's written informed consent for the test. Written informed consent shall include a description of the test to be performed, including its purpose, potential uses, and limitations, the meaning of its results, procedures for notifying the applicant of the results, and the right to confidential treatment of the results. Prior to the applicant's execution of the consent, the insurer shall:
(1) Provide the applicant printed material describing HIV, its
causes and symptoms, the manner in which it is spread, the test or
tests used to detect HIV or the HIV antibody, and what a person can
do whose test results are positive or negative.
(2) Provide the applicant a list of counseling resources
available, where the applicant can obtain assistance in understanding
the meaning of the test and its results. The list may be provided
from publicly available information.
It is clear from the context, that the Code is referring to the insured, not a third-party applicant/owner whose insurability is not in question. We know that insurers have, for the most part, incorporated such consents within the application, or in additional forms that are made a part of the application. No signed consent, no insurance. Unless the insurance amount is small, say $50,000 or less, the majority of insurers utilize saliva, blood, or urine testing for HIV/AIDS.
Various state and/or federal laws also require informed consent of the insured under a COLI/BOLI policy applied for by their employer, particularly when the beneficiary will be the employer and not a person of the insured's choice, such as when the policy is being used to informally fund a nonqualified employee benefit plan.
Please share your thoughts.
Posted: Fri Dec 11, 2009 01:58 am Post Subject:
First, thank you InsTeacher, for eloquently making the point I've been trying to get across. California's insurance Code is not quite as explicit on this point, using the word "applicant" as often as it does, but clear reading of the Code in context makes it apparent that where "applicant" is used, in most instances the legislature assumed that the applicant is the insured. As it usually is.
California Code is very clear about the need for insurable interest to exist at the time of policy issue, and it escapes the time limit of the incontestibility clause.
As I've already posted elsewhere, California Code specifically requires a spouse's knowledge and consent (unlike Oregon), but the law is essentially the same when it comes to children, as they are described as not being competent to contract under age 16.
Wendy . . . Because your son is only 16, unless you're applying with Prudential and maybe a handful of other companies, as a minor he will not be required to sign the application (Pru requires the signature of children as young a age 8 -- I have no clue why) if you are making the application. He is legally permitted to apply in his own right, in which case he would have to sign. So don't worry, go ahead and apply. If he wants to sign, he can. You would still sign separately as the owner/applicant.
Children being insured are often required by the insurer to be seen by the agent at the time the application is taken, or the agent must state the reason he did not see the child (lives out of state with a custodial parent, away at school, out of the country on vacation, etc.). So set the appointment at a time when you know he'll be home.
Without actually seeing the child, the agent (as a "field underwriter" -- eyes & ears of the company/first line of defense against "adverse selection") has no idea if he is healthy, has an obvious preexisting condition, or is even alive. Some companies will refuse to accept the application under such circumstances.
Agents know this, and submit applications with their box checked "Yes" anyway ("I personally saw the child") when it is not true, and it could end up being a problem, especially for the agent.
But when you sign the application, the words near your signature usually state something like, "All of the information contained in this application are true and complete to the best of my knowledge." That's why anyone would NEVER want to sign a blank insurance application. Doesn't make you responsible for the agent's lie, but could be contested by the insurer as a material misrepresentation if you were aware that he misrepresented the situation on the application ("We'll just tell them I saw your son, so it won't hold up the processing"). Sounds innocent, doesn't it?
Posted: Fri Dec 11, 2009 02:06 am Post Subject: insurance
Hey, MAX. When I applied, I DID tell the Insurance company that my child no longer lives with me (sniff,sniff). He now lives out of state with his dad. They didn't ask about seeing Medical Records, etc. on him.
Posted: Fri Dec 11, 2009 02:19 am Post Subject:
When it's disclosed, that's always a good thing. As to no medical records, etc., you can't be certain they didn't go looking for them. Your signature on the app gives consent to obtain his medical records.
If they did, and nothing was amiss, he'll qualify for the coverage.
Posted: Fri Dec 11, 2009 02:26 am Post Subject: insurance
They DID tell me that they had an Applicant say her child DID live with her..which was not the truth. When the Insurance company found out, they denied her application. (Thinking outloud here..) ...Why WOULDN'T the Applicant tell the truth? The worst the Insurance company could do is say she doesn't qualify, etc. and it wouldn't look 'negative' on the Applicant.
Posted: Fri Dec 11, 2009 02:52 am Post Subject: insurance
(I posted this on another thread, as well)....I was looking at a website for 'my' Insurance Company, that I started my son's Life Insurance through. Was browsing through a section about Signatures, Beneficiaries, etc. I DID find a section pertaining to who needs to sign an application and who doesn't. It stated if the Insured is "18 years of age or older" they MUST sign a Life Insurance application.
Posted: Fri Dec 11, 2009 06:04 am Post Subject:
You have to understand that there really are people out there who will say and do anything to get insurance or obtain a claims payment. Insurance companies prefer that people tell them the truth, but they know that a certain percentage do not.
There's no good reason for a life insurance company to deny coverage to a child who is living out of state on that basis alone, and most would simply require a paramed exam at the child's out-of-state residence so that it can be documented that someone saw the child (meaning living and breathing). But there's also no way to prevent someone from substituting an impostor, so insurers often take a guarded stance and underwrite conservatively. In the case you describe, I would believe that the decline was for the adult's misrepresentation rather than for the child's lack of insurability.
Posted: Fri Dec 11, 2009 12:00 pm Post Subject: insurance
Ok.....I can understand that. I would think it would be some sort of a 'crime' (lack of a better word) to lie on a Life Insurance application.
Posted: Fri Dec 11, 2009 01:39 pm Post Subject:
On the application, it's not so much of a crime unless the intent is to defraud. If it's untrue it can simply result in the policy being voided and no claim being paid.
On a claim form, however, it is absolutely a crime, and here in California, the mere act of signing a false claim form, with or without intent to defraud, is an additional offense punishable as perjury, which by itself is a felony worth 2,3, or 4 years in one of our fine, overcrowded state prisons. But at least there you can have your own "semi-private room", color TV, cell phone, and better health care than most others on the outside -- including heart, kidney, liver, and lung transplants -- at no cost to you. You're even covered for Workers' Compensation when you're stamping out license plates or washing underwear in the laundry or serving chow in the mess hall.
Almost better than being in the military. LOL
Posted: Sun Dec 13, 2009 03:06 pm Post Subject: insurance
My goodness, MAX!! You're very funny!! However.....only one thing with that. The Military doesn't make license plates...LOL I wouldn't want to go to prison..I like my freedom too much. MAX..have a question. When my son turns 18 years of age, does he have to sign the policy THEN?
Posted: Mon Dec 14, 2009 08:21 am Post Subject:
No. As others have posted in different threads about what happens after a policy is issued (like now a smoker or a pilot), once the policy is in force, it is based on the original application information. Changes after that point in time are only an issue if one applies for new insurance not guaranteed by the policy or an attached rider.
In the case of a life policy on an adult with a child rider (covers a child under 18 at the time of application, and usually provides protection up to age 21 or 25), the child does not sign the original app, or anything else at or after age 18.
However, the rider will also offer them anywhere from 100% to 500% of the rider's face amount as a Guaranteed Issue individual policy. That they have to apply for, it is not automatic, because a premium has to be paid. Even though there may be no underwriting, the child -- now an adult -- has to sign the application for the new policy. They cannot be declined or rated substandard (unless already rated substandard as a child -- unusual, but not unheard of).
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