I’ve minced no words over the years about how bad the AARP/New York Life life insurance program is. It is so egregiously over priced and under guaranteed that I swear, if I got selling it to some elderly person in their home, I could be justifiably locked up. States everywhere are cracking down on the ethics of selling financial products to the elderly, yet they let AARP sleaze along under the radar molesting our seniors with their life insurance.
I have heard and read about the possibility that AARP has withheld payment of death benefits without justification and have never gone there because I just didn’t have any facts to work with. Yesterday I got a call from a woman in Florida who had read a post of mine on life insurance contestability. Her father died in April from lung cancer that was diagnosed just the month before. It was such a high stage and grade when they found it, there was simply no chance of survival.
Her father had purchased a $10,000 life insurance policy a year and 8 months prior to his death which meant that the death occurred during the two year contestability period. If death occurs during that two years the company, any company, is allowed to go back and investigate records to see if the insured died from something that was known to them but not included on the application. When she filed the claim they let her know what the process would entail and that no claim would be paid until the investigation was completed. She knew that her father had no previous knowledge of lung cancer or of any lung problems at all because she had been to virtually all of his doctor appointments with him for the last several years.
She called about 10 days ago to get an update and was told they had all the records and were reviewing them and that things should be settled shortly. Two days ago she called and was told that the company was going to return the premium plus interest and not the full death benefit. The claims person didn’t offer any explanation, but the only way that can be the answer is if they found out that the insured had knowledge of his lung cancer prior to applying. In that case it would be considered successfully contested and by law the company has to send back the premium plus interest.
It was at this point that she contacted me. She emailed me a copy of his policy and application and after reviewing everything it didn’t seem to me to be something that was contestable as long as the company didn’t have information that the daughter didn’t know about. My first thought was to refer her to the state insurance commission who I have no doubt would eventually get to the bottom of the problem and figure it out, but then I asked her if it would be ok if we conferenced in on the phone together with the AARP claims department, so she could let them know that as the beneficiary I was representing her in getting more information. I made no claim to be an attorney.
We got voice mail so she listened as I explained I was a life insurance agent who was representing her concerning the death claim on her father’s policy. It was a generous voice mail so I left all of the information including the fact that we had reviewed the application and policy and were not convinced that it was contestable and would they please call me the next day, today, and allow time for me to conference the beneficiary in again so we could hear why they thought it was successfully contested.
The funeral home that was holding the policy as collateral for the expenses got a call this morning saying that the policy would be paid in full. They didn’t call her and they didn’t call me. They just reversed course and agreed to pay the claim in full.
Bottom line. It makes me wonder if this isn’t a regular practice of AARP. For those who don’t know any better or don’t have as good a handle as his daughter did on his health, being told that the premium was being refunded with interest might fly. My sincere recommendation for those who have run into this same issue, even those who aren’t sure if the contestability was valid or not, is to call AARP/New York Life at 800-695-5165 and tell them that you want proof of successful contestability or you will go to the insurance commissioner and file a complaint. If you have any questions or think you may have been mistreated by AARP, call or email me directly. My name is Ed Hinerman. Let’s talk.