Flaws can cancel life insurance — after death (we need to pat down insurance co's...)

[The Straight Story]

American General Life Insurance Co. markets its policies as protection for "the hopes and dreams of American families" — a promise Ian Weissberger took to heart during his losing battle with Lou Gehrig's disease.

But after the Cathedral City mortgage broker died in 2005, American General cancelled his life insurance policy and refused to pay his widow the $250,000 benefit.

The Weissbergers' premiums were paid up. There was no foul play suspected. There was no question Sheila Weissberger was the widow and sole beneficiary. And Ian's illness was diagnosed months after he took out the policy.

The problem, the insurer told Sheila Weissberger, was that Ian's application for coverage was incomplete.

American General concluded that he had failed to disclose conditions, including bipolar disorder and pulmonary disease, that, according to his doctors, he did not have.

http://www.latimes.com/news/local/la-me-life-insure-20101121,0,4197678.story?track=rss

[CC]

1. Taking lessons from the

Health Insurance industry now.

I think American General has been in trouble before for not paying out policies though might be recalling it wrong. Would of been 10 to 15 years ago.

[endless october]

2. insurance companies that pull this kind of shit need to face seizure and liquidation.

liquidate a couple of them and then watch as the rest of them actually decide to pay the claims they owe.

[grasswire]

3. I don't think that's unusual.

They grant the policies and take the payments, and then refuse to pay out over some minute detail. AFIK, this happens all the time.

[laundry_queen]

4. Sure does.

The more I learn, the more I see how insurance companies are evil evil evil.
In a business law course I'm taking, we were talking about a case of this guy's restaurant burning down. It was arson, and he was charged. He totally denied it and was found not guilty. That didn't matter. The insurance company didn't pay, and even after being sued didn't have to. All that is needed is a suspicion of ANY reason not to pay out the policy. This was in Canada btw so our laws protect the assholes too. So, if they have any reason at all to suspect anything at all, they will find a way not to pay. And the courts will side with them. Makes me want to vomit. Repeatedly.

[SoCalDem]

5. Makes sense to buy those "no questions asked" small policies

They are usually limited to $10K, but 4 or 5 of them adds up:)_