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No need for an apology.
I agree, he answered the question wrong. I cannot ascertain why or the motive. It makes no sense. Do you imagine that if he had said yes, they wouldn't have issued the policy? No one seems to be able to answer that.
Do you know if an agent was involved anywhere in the process? Was this application done on line? What did the client sign? Remember, this was an ap for $1m.
I once competed for business on a smoking client. Before he would buy from me he wanted to talk to his existing company. He called me to say they had come back with a better premium. I questioned him about it and eventually told him to go ahead and buy it but he agreed he would let me see it after it was delivered. When I got to his home, Iooked at the policy and then the ap in the back of the policy; it was checked
"non-smoker". I asked if he saw that. He said the agent, with his manager present, filled in the form and all he did was sign it. He said the agent never asked him the question, and that the agent knew he smoked because he smoked in front of him. I filed a complaint on his behalf with the regulators, nothing came of it.
So for you an omission is a lie. Fine. But it doesn't matter, the omission opened the door to the policy being contestable (withing 2 years). He could have been killed by a drunk drive while he walking across the street and the policy was never going to pay.
But if you assume an omission is a lie, then you can also assume it was fraud, and the policy could have been contested (in a number of states) 5 years later.
I am not giving anyone a free pass. But usually people are innocent until proven guilty. Further, life insurance applications are long, tedious documents and in my opinion should be completed with the assistance of a real live life insurance agent present. There's a reason they make you get a license and E&O insurance.
USAA is a direct writer, everything is purchased either online or through a company employee. I believe it said in the beginning that he purchased online in this case.
And yes, if you are on a witness stand and asked if you run Compulife and you say no, is that not incorrect? And if you know for a fact that you know you run Compulife, is it not a lie?
While we are unable to question him, the fact he answered three different questions no, any one of which he should have answered yes, then I'm inclined to believe he did it knowingly. This is my opinion, so you can continue to debate it but it isn't provable either way.
And yes, in most states, a material misrepresentation is enough to void a policy within the contestable period, it need not relate to the actual cause of death. I say most states because I recall reading at least one state required it relate to the actual cause of death. I don't feel like looking, and I'm ok with a rule either way on this.
Also, the original article mentioned that had he been written at the correct rate class, the premiums paid would have bought over $500,000 in death benefit. He was far from uninsurable, he simply wasn't going to get the walk on water rate he wanted.
Finally, while I believe in this case his omission was a lie, that doesn't mean it can be proved to the point of being fraud. And again, this is no different than answering no when you should answer yes on a witness stand. Despite what you seem to think, or perhaps from your experience in Canada, proving fraud without a living perpetrator is not such an easy task.
I do agree with you, people should use agents as they generally help. However, people still omit facts or outright lie to insurance agents as well.