Incontestability Clause

[lifesettlementadvisor]

I have a question. where another owner takes over the payment of premiums waiting for an insured to die would this be considered fraud and a Stoli. He became the second owner. Don't know if there was a chage of ownership done with the carrier. It was told to me by someone I know who was asking for another individual. I AM NOT INVOLVEDD!

It is only considered STOLI if the policy is taken out by someone that does not have insurable interest.
If the original policy owner had insurable interest and then decides to sell the policy, it is not STOLI nor is it fraud.

On a side note, a recent court case found that carriers DO have to pay death claims on "STOLI" policies.

 

[u18247]

It is a moot question because if the smoker died the incontestabilty clause does not apply to him/her. At that point in time they couldn't care less!

What? I am not sure I understand what you are saying. Who is the "they" who "couldnt care less."

What do you mean by the contestability clause does not apply? I think you are saying that the contestability period has expired and that the insurance company couldn't care less. Is that what you are saying?

 

[arnguy]

What? I am not sure I understand what you are saying. Who is the "they" who "couldnt care less."

What do you mean by the contestability clause does not apply? I think you are saying that the contestability period has expired and that the insurance company couldn't care less. Is that what you are saying?

I am referring to the smoker a/k/a the deceased!

 

[u18247]

I am referring to the smoker a/k/a the deceased!

Oh. I meant has a beneficiary been denied the claim if a smoker died outside the contestability clause.

 

[LGilmore]

OK, just got off the phone with the OIC in Washington.



RCW 48.23.050

Incontestability.

</B>
There shall be a provision that the policy shall be incontestable after it has been in force during the lifetime of the insured for a period of two years from its date of issue, except for nonpayment of premiums and except, at the option of the insurer, as to provisions relative to benefits in event of total and permanent disability and as to provisions which grant additional insurance specifically against accidental death.

RCW 48.23.040

Entire contract — Representations.


</B>In all such policies other than those containing a clause making the policy incontestable from date of issue, there shall be a provision that the policy and the application therefor, if a copy thereof has been endorsed upon or attached to the policy at issue and made a part thereof, shall constitute the entire contract between the parties, and that all statements made by the applicant or by the insured, shall, in the absence of fraud, be deemed representations and not warranties



Yes, they have to approve language in a policy and application before a carrier can use with public. The carrier cannot have statements inside a policy that conflict with state laws.
So here in Washington it is 2 year contestability except in the case of fraud if the carrier uses that language in the policy.

I suggest you call your OIC and ask them. While I know none of you are that stupid that you would encourage lying on an app, if you have doubts, call your oic and ask. That's what they are there for.

 

[u18247]

That was a good idea . I called the oic in maryland. They told me the insurance company has no recourse after 2 years and are reqiuired by law to pay he claim even if the the client smoked at the time of the application and said he did not. There is nothing they can do but pay the claim.

 

[LGilmore]

did they give you the code to reference?

 

[b61mack]

does the blood test and urine test. show if the person is a smoker ?

 

[u18247]

did they give you the code to reference?

No, but i looked it up 16 203. It is very clear. By the way, all the policies I looked at on my desk mentioned nothing in the contestabilty about "except fraud." the are all worded just saying we cannot contest the policy after it has been in force for 2 yrs (paraphrasing). It says nothing like the genoworth policy you mentioned. The copmanies were lincoln and banner.

 

[VolAgent]

I suggest you call your OIC and ask them. While I know none of you are that stupid that you would encourage lying on an app, if you have doubts, call your oic and ask. That's what they are there for.

I called to see, unfortunately I had to leave a message. Hopefully I'll get a call back Monday.