When I sit down with an insured to start a policy. I mention then that they are signing a contract for themselves. They can have a legal guardian, an office assistant, their girl/boyfriend call for payments, but if something changes this contract, we will need to hear from them directly.
One of my first calls I took as an insurance agent was a father of the second named insured on the policy my company held. It came in the morning, right after I started my day. By his tone and voice, I could tell he was anxious and upset. I could hear a weepy person in the background as he spoke, I assumed it was his wife.
He told me his daughter, my insured, was in the hospital. It seems the previous night, the first named insured, had taken the family car (our insured vehicle) and rammed it into the family home, also covered under the same company. He had then gotten out of the car with a hatchet or axe and chased the second named insured around the house, slicing her several times.
There were no children, just the first and second named insured. The family dog had died in the crash. The entire front of the house was demolished and, as we were speaking, the town engineer was declaring it uninhabitable.
It is obvious that this relationship ended in divorce. This is not a call you get every day. I would say on average you should have had at least one after six months in insurance. In this case, I transferred them to a claims representative.
If they had requested to make any changes, I would have had to decline. If you look at any policy definitions pages, the policy starts with this line: In this policy, ‘you’ or ‘your’ refer to the named insured shown in the Declarations and: (1) spouse; or (2) party who, within the named insured, has entered into a civil union, recognized under law.
Because of that clause, you may have to bear witness to one of the following: (1) divorce situation, (2) the death of an insured with surviving spouse, or (3) the death of an insured without a surviving spouse. Here are some examples and solutions.
The Divorce Situation
According to the National Center for Health Statistics (NCHS) as of 2011, the divorce rate in the United States was 3.6% per 1000 couples. Personally, my stomach lurches when I come across a policy marked ‘divorce situation’ with asterisks and bold lettering.
No one wants to be added to the divorce proceedings witness list; so proceed with caution. Once you are aware of the situation let their carriers know. Before you start moving things around on policies, try your best to make sure the divorce is finalized.
Get documents like titles, deed, etc. if they want to change names and beneficiaries. If necessary, get a statement in writing. Please remember you are dealing with very angry and upset people who have a lawyer on cell phone speed dial.
Death of An Insured with Surviving Spouse
In marriage, the rule applies – everything that is mine is your and vice-a-versa. Insurance carriers rarely ask for a death certificate. I have worked for a couple who will scold representatives for asking for it up front. If you are not familiar with the insured, I would get it.
I have had one spouse tell me the other spouse was deceased when in fact they were not. It turned out to be a nasty divorce. Yours truly ended up getting deposed.
The carrier will also have a copy of the application on file and will be able to see if the insured was married or not. Once they have the documentation and/or statement, the deceased insured would be removed and the survivor would then become first named insured.
Death of An Insured without a Surviving Spouse
In these cases, you may be aware of possible changes to the policy due to the insured or their children providing you with a power of attorney document. This is a legal document held by a person named by the insured that gives power to that person to act on behalf of a living insured with respect to medical care and finances.
If you have someone calling all the time a policy and they are not the named insured, it’s best to see if there is a power of attorney in place. If not, get something in writing from the insured.
Once the insured has passed, you may be dealing with the Executor or the person named in the insured’s Will who is responsible for taking care of the remaining financial obligations for the deceased insured. Please do not ask the Executor for a Power of Attorney.
This also does not mean you should place the policy into the Executor’s name. The policy will most likely be placed into the ‘Estate of’ and then be non-renewed. Once the estate is settled and the remaining items and monies are distributed, then you may start a new policy for who got this or that.
Keep in mind your duty is always to your insured, no anyone else. A good relationship with the insured will definitely come in handy here. Potential clients may appreciate the kindness, trust, and confidentiality you have exhibited.
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