Can you imagine how bored I would get if I couldn’t count on AARP to provide blog material on an absolutely continuous, unending basis?
After all of the really awful things I’ve had to say about the AARP/New York Life insurance program over the years, my last two posts have been about their good side. People died and AARP just paid the death benefit. Absolutely the way it ought to work if it had actually happened that way. Just a few weeks ago I wrote about a lady that called, very distraught, because AARP had just informed her that rather than the $10,000 death benefit her father’s policy was supposed to pay they were going to return the premium plus interest, about $1600.
Her father had died during the two year contestability period, about 18 months into the policy. So, as is the nature of life insurance AARP told the daughter that they would be pulling his medical records to make sure he didn’t have any prior knowledge of the cancer that was diagnosed 1 month before he passed. She occasionally called for updates and they had told her the last time she called that they thought it would take about 10 more days. She called in 10 days and the claims person told her that they had completed their investigation and that she would be receiving a check for the premium he had paid in plus interest, not the $10,000.
It was at this point that she called me because of a post I had written on contestability. I listened to her story and she faxed over the application, policy and other documents and a letter that read, “I have retained Edward Hinerman to represent me in the claim that was submitted on my father, John Doe. Mr Hinerman has my permissi0n to review documentation regarding your decision on this claim. He also has permission to file any insurance commission or executive complaints about this claim on my behalf. Thank you in advance for your cooperation”. With that in hand I called AARP/New York Life claims and left a message for the claims person who had told her about the earlier decision. I let her know that I had reviewed the application, policy and medical history of the client and didn’t understand how they came to the conclusion of having successfully contested the policy.
I was about to call again the next morning when I got a call from the daughter saying she had received a voice mail from the claims person saying that the company would be paying the full benefit. She has since received it. It didn’t do much more than pay his final expenses, but at least it didn’t come out of her pocket.
Within a few days after writing a post about that I got a call from another woman. Her father had a $50,000 policy with AARP and had purchased it about 8 years prior. She said there was a point about a year prior when her father had received a lapse notice because he had missed a payment, but had called right away and they accepted his payment to put the policy back in force. No harm, no foul. They didn’t ask any health questions or require him to complete a reinstatement application or they would have known that in 2009 he had colon cancer and that eventually that was what he died from.
So the daughters filed the claim and the AARP claims person said that they would be ordering medical records because, since the policy had lapsed, a new 2 year contestability period had started. That didn’t sound right to me. My understanding was the the contestability only started again if a person had to apply for reinstatement. I confirmed this with a friend who was in claims for a large company and he told me AARP was wrong. If they accept payment to reinstate without an application it’s as if the policy had never lapsed. (Remember that all of you knuckleheads who get lapse notices with an offer to reinstate with just the premium).
I called the daughter back and suggested she call and confront the claims person about their assertion that the policy had lapsed and was in a new incontestability period. I told her to mention that she had talked with a claims person who said that if the company accepted payment without a reinstatement application that the grace period didn’t start over and AARP had no business ordering medical records.
They called her back the next day and said they would be paying the claim in full. She has since been paid in full. Both of these situations are well documented on my end in case AARP would like to fuss about it. Both of these situations appear to have been attempts by AARP to get out of paying legitimate claims and when confronted, they immediately paid.
Bottom line. Are these isolated cases? And even if they are isolated how could an insurance company claims department be so wrong on these simple issues? I’ve minced no words about just how awful and unfair AARP’s life insurance products are. That’s right out in the open for everyone to see and I’ve never had anyone argue the other side of that opinion. Could it be that an advocacy organization that has the audacity to sell some of the worst life insurance products on the market is also trying to treat beneficiaries in a like manner on the other end of the product? If you have any questions or are having problems with a legitimate AARP life insurance claim, call or email me directly. My name is Ed Hinerman. Let’s talk.