Here is a story of an unusual insurance claim that got paid.
A husband and wife kept paying his life insurance into their early 60s but finally decided that it was too expensive. They contacted me and I recommended they have a thorough physical from his doctor first, which he did and which came back clear. So he cancelled his policy. Six months later I get a call from their son saying that his father has passed away from cancer diagnosed three months earlier – three months after the cancellation - and wondered if anything could be done. I am not sure why he called me as every other adviser he talked to said that it was hopeless. After all, the policy was cancelled.
However, my reading was that you tend not to pass away this quickly after most cancer diagnoses unless you have been terminally ill for a while. As most life insurance policies pay out if you are terminally ill and have less than one or, sometimes, two years to live, it was quite likely that the father had been terminally ill before the policy was cancelled and his life insurance policy would then have been paid. I suggested they put in a claim stating that the father had been terminally ill when he was still insured if the doctors agreed that was the case despite the clear physical from six months earlier. Privately, I gave it 50/50 that the claim would be paid, which means it was worth trying but there was no certainty as, for example, the cancer may have been developing faster than normal. The doctors judged that the father was terminally ill more than three months before the diagnosis and, when the claim was submitted, MLC paid without a murmur. That payout has transformed the widow’s life. His wife sent me a deeply touching message of thanks including:
“Not only did I lose John (name changed) but our business that we both worked in is no longer an option without him. This money has literally changed the remainder of my life. It has given me new options.”
I reasonably regularly hear about such stories from other advisers – if you have a good policy through an insurance agent and you have a genuine claim you pretty much always get paid. It is other policies, those with no insurance agent involved, that can be much harder to get paid. So, congratulations to MLC for honouring their policy when they easily could have made life difficult or impossible for the widow and her son.
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