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Cautionary Tale for Life Insurance Customers

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Life is a tricky business full of twists and turns that course quietly through the days and months, and then suddenly, in a moment, bad faith insurance changes everything and an unexpected outcome leaves “what-if-only” thoughts looping through the human brain.

And so it was for a woman from somewhere in the southern US. She prefers the moniker “Average-Mom-of-Three” who is still struggling with a cruel result that no one saw coming.

We’ll call her “AMOT.”

AMOT and her family own a heating and air-conditioning company. It was started by her father-in-law many years ago. He’d become a wealthy and thoughtful man who went to great lengths to ensure that everyone in his family would be well taken care of when it came time for him to shake off his mortal coil.

His wife had died some years before and he had carefully and fairly parceled out property, life annuities, bank accounts, life insurance policies, vehicles and everything else he owned to members of his family. When he died, he wanted everything to pass smoothly with no arguments among the heirs.

Enter one of those life-twists that so frequently interfere with the best-laid plans.

AMOT and her husband were focused on a sick child - a child who was in fact dying. AMOT got behind in her paperwork and let some bills lapse. She also let the premiums on her father-in-law’s life insurance policy lapse with Protective Life. The policy had first been purchased some 7.5 years before.

She also let the premiums lapse on two other policies that were related to the business and commercial property. “We didn’t know you could re-instate an insurance policy; we had never been late with anything before,” says AMOT.

When she approached them about instating the policies, they explained the process and the policies were once again in effect. She then went to Protective Life to deal with her father-in-law’s life insurance policy.

“Can you even re-instate a life insurance policy I asked? Protective Life said all we had to do is fill in a re-instatement form. If it’s approved, you are ‘good to go.’” says AMOT.

No mention that there would be a two-year waiting period before any claim could be made related to the life insurance policy that was held on her father-in-law’s life.

To be clear, AMOT’s father-in-law had developed cancer during that 7.5 years that he had the policy. Protective Life knew that, but as long as the premiums were paid on time, there was no issue.

“If we had known that there would be a two-year waiting period, we would have paid the late premium and also made some changes to the way the property was dispersed in case he died during that two-year period,” says AMOT.

AMOT and her husband were the beneficiaries on the life insurance policy. The other assets were assigned to other beneficiaries.

“This was a key employee life insurance policy,” says AMOT. “When they were considering re-instating it, not only did they know there was a family that was going to need this money, this is a family and a business that is going to need these funds if something tragic happens. All they had to do was tell us that this was subject to deniability. That’s all they had to do.”

Then along comes another one of those things that you can’t imagine happening. AMOT’s father-in-law died - suddenly. He died four months after the life insurance policy had been re-instated.

AMOT and her family were stunned that Protective Life could deny their $500,000 claim. It left them struggling to hang on to the family business and fighting foreclosure on their home.

“Not all life insurance companies do what Protective Life did,” says AMOT. “I have talked to other companies and they don’t all do that.”

Attorney Spencer Farris who has waged considerable battles against insurance companies on behalf of consumers says AMOT needs to see a lawyer. “I can’t really say without knowing all the particulars of this case,” he told LAS. “But this is the kind of thing that a lawyer should look at. It always pays to see a lawyer.”

In an e-mail response to LAS, Protective Life said it “could not discuss specific matters when confidential health information is involved.”

In another addition, the company representative went on to write, “Pursuant to state law, life insurance carriers review any claim that is filed within two years of the date the policy was originally issued or the date a policy has been reinstated. If during the review, it is discovered that there were material misrepresentations regarding medical or other relevant information that would have prevented the life insurance carrier from originally issuing the policy or reinstating the policy, then the claim is denied.”

For her part, AMOT says that all the questions were answered truthfully, and that AMOT’s family gave Protective Life complete access to all medical information regarding her father-in-law’s health, in addition to the information the company already had.

It was the end of 2008 when all this unfolded. Years later, the “what-ifs” still ring in AMOT’s head.


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Posted by

My husband passed away 06/11/2016.I immediately informed the insurance company and within a week I received the claim forms.

On the forms it listed my husbands EX-Wife as the beneficiary. I was absolutely shocked because I knew within the year that we were married in 2007, he and I had updated all of our banking and insurance documents as each others beneficiary. I stressed this to the insurance customer service representative.Only to be told there was nothing they could do it would be paid to the contingent beneficiary since my husband and his Ex were divorced. I immediately sent a dispute of the payee not being myself.

In September my husbands former employer was able to locate the change of beneficiary document that my husband and I filled out 08/10/2007 and sent it to Protective Life. I still never heard anything from them. I called again on 10/27/2016 and was told that the change of beneficiary was not valid because I had signed as an owner. The change of beneficiary form clearly listed in the signature requirements that "If the owner resides in the Community Property States of Texas...., we recommend that the Owner's spouse join in signing this form." Which I did.

Further more, page 5 of the original policy "Changing the Owner or Beneficiary. The owner may change the Owner or Beneficiary during the Insured's lifetime. To make a change, the Company must receive a written request satisfactory to the Company at its Home Office. Any such change will take effect as of the date the request is signed, even if the insured dies before the Company receives it." All the requirements were fulfilled and there is no ligament reason that I should not be paid as my husband always intended.

I have sent several email that are not being responded to. Each time I call I am told that the representative is away from her desk. I have no choice now but to turn them over to both the Texas Attorney General Office and Texas Department of Insurance. This all could have been avoided had someone done their job in 2007 and made the changes my husband wanted.

I certainly don't anyone to go through the *** I have with this company.Going on 8 months and have not seen a penny of the life insurance benefit.

Posted by

This is wor-for-word the reinstatement letter we received after the Protective Life Customer Service Consultant told us that "if reinstatement is approved, you are good to go."

"Dear XXX

We have approved the reinstatement application and are pleased you with to retain this valuable insurance protection.

However, to reinstatement this coverage, we require $5,292.00 to pay the premium to February 11, 2009. If we do not receive this amount within 14 days of this letter's date, the policy will remain lapsed according to the provisions within your contract. For your convenience, we can accept this payment over the telephone at 1-800-866-9933. We cannot accept debit or credit cards. Upon reinstatement, you may select to have your premium drafted from your bank account. If you wish to select this option, please include a voided check, along with the remittance indicated above.


Customer Service Consultant
Life and Health Insurance Administration
1-800-866-9933, Ext 6711"

There is one mention of our contract - and that is only in regards to Protective Life not receiving our payment by February 11, 2009 - which they did.

At no point during this reinstatement process did the employee of Protective Life who earns their paycheck working in the reinstatement department disclose that they two year deniability period started over again upon reinstatement. Our policy was reinstated with the same policy number, same premium, same death benefit - with absolutely no disclosure either written or verbal. And there isn't one person in the entire company who cares -


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