Death Benefit Claim Fail #LIAM Reprint
September 4, 2024 by Sheryl J. Moore
As the nation’s top expert on life insurance and annuity products, I have spent a great deal of my time over the last couple of decades pouring-over specimen contracts and prospectuses. It’s what I do. It’s why I’m the life of the party.
Given that, I am going to admit to you one of the most embarrassing mistakes I have made in my life, as an expert on insurance contracts. I share it with you, so that you can learn from it and even possibly use it as an opportunity for sales. For perspective, I need to provide some background.
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In my early 20s, I was going through a messy divorce and the single mom of three kiddos. My relationship with my ex-husband was, and still is, very poor mostly due to unmet financial obligations. When I got my first job working for an insurance company, it didn’t take long before I understood in detail the value of life insurance. And yet, I didn’t have two nickels to rub together.
So, when I received a flyer in my mail, suggesting that I purchase life insurance on my children- I jumped at the chance. I couldn’t afford the fully underwritten insurance my employer offered just yet. However, the guaranteed issue product was better than nothing. I completed the application from my mail insert and caught note of an important disclosure.
“Unless otherwise requested, the parents of the Proposed Insureds shall be the beneficiaries.”
I wrote a note on the application, and submitted an adjoining letter, indicating “Please send Ch. Of Beneficiary forms upon approval.” My ex-husband knew nothing of the life insurance coverage, and why should he? I would be paying the premiums on the policies covering my children’s lives. I was 100% financially responsible for my kids, and I would be the one shouldering the costs of any potential funeral expenses. He shouldn’t be the beneficiary of the contracts.
The policies were issued.
My complicated, challenging life continued, and I lost track of the fact that I was never sent a change of beneficiary form. This may seem insignificant, but it became very important 11.5 years later.
I’ll never forget the day that my son took his own life, as a result of bullying. I cannot describe the devastation. However, it may be easier to explain the feelings after receiving a check for only half of the death benefit on my son’s life insurance policy. I was clueless. I had no idea why. When they told me that my ex-husband received the other half, I felt like dying all over again. He financially benefitted from the death of our son and offered not one dime for the burial costs.
Not one of the nearly dozen insurance salespeople I’ve worked with throughout my career has ever suggested that I update this information, as they assumed that since I am “the expert,” I had my house in order. What a hard way to learn such a lesson.
Take advantage of opportunities to review insurance policies. It results in happy clients and opportunities for more sales.
Sheryl Moore is President and CEO of the life and annuity market research firm of Wink, Inc. Her company provides competitive intelligence, market research, product development, consulting services and insight to select financial services companies. She may be reached at sjm@intelrockstar.com.
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