Relatedness between POIs and musicians

will be paid to the assignee.

c) the collateral assignee’s right to the policy values are temporary.

If the assignor pays back the assignor then the assignment terminates. Once the loan is repaid the assignor secures a release from the assignee and forwards it to the insurance company to cancel the assignment.

Problems resulting from assignment: - The most common problem arises when the assignment is not notified to the insurance company through a written document. If the insurer was not notified of the assignment before it paid the policy benefits, then it has no liability to pay the proceeds again to the assignee.

 Transfer of Ownership by Endorsement: - Many life insurance companies in United States specify endorsement method of transferring ownership. Under this method, ownership is transferred without requiring the owner to enter a separate contract. This is generally used where the policy is transferred as a gift. According to this provision, in order to change the ownership the present owner must notify the insurance company, in writing. When the insurer records the change, change actually becomes effective from the date when the policy owner signed the notification. The policy must be returned to the company to include the endorsement and to transfer the ownership. But in certain situations only a written document can be considered to transfer the ownership (as for example in case of an unfriendly divorce.)

CHAPTER 13: PAYING LIFE INSURANCE POLICY PROCEEDS

In this chapter we shall discus the routine process followed by the Life Insurance Companies to process the life insurance claims. The claim examination process begins when the claimant to policy proceeds notifies the insurance company that the insured has died. Typically, the person who claims for the policy proceed is the primary beneficiary.

Upon being notified o the insured death, the insurance company typically provides the claimant with a claim form on which the claimant provides the insurer the information the insurer needs to begin processing the claim. In United States it is mandatory to provide claim form within 15 days from the day of requisition but in Canada there is no such hard and fast rule.

Proof of Loss:

Along with the claim form the claimant must also provide the proof for the death of the insured. In United States generally the official death certificate is produced but in Canada, most insurance company will accept official death certificate, an Attending Physician Statement (APS), a coroner’s certificate of death.

Claim Examination Process:

The insurance company employee who is responsible for carrying out the claim examination process is generally known as claim examiner. The following things are determined:

-Status of Policy: - The claim examiner must check whether the policy was in force when the insured died.

Identification of the insured: - The claim examiner examines the identity proof present in the Claim from and the Proof of loss form with the information provided in the company’s policy records. A claim is considered as fraudulent claim when the claimant intentionally attempts to collect policy proceeds by providing false information.

A claim is considered as a mistaken claim when the claimant makes an honest mistake while making a claim.

Verification of Policy Coverage: - The examiner must review the terms of insurance to determine what type of coverage it provides. Policies that contain exclusion criteria provide that if the insurer dies if the insurer dies due to excluded causes then the insurer is not liable to pay the proceeds.

Identifying the Proper Payee: - Once the validation of the claim has been done the examiner now needs to identify the rightful owner of the benefits. The examiner generally follows the following flow chart. There are 3 situations that require further investigation by the claim examiner- common disasters, short-term survivorship, and conflicting claimants. Sometimes both the insured and the primary beneficiary die due to a common disaster. In this case the general law of Unites States and Canada states that

If the insured and the beneficiary die at the same time or under circumstances that make impossible to determine which of them died first, then policy proceeds are payable as if the insured survived the beneficiary. If the beneficiary survived the insured but died before the insurer paid the proceeds then it becomes payable to beneficiary’s estate. The policyowner, however, may prefer that the proceeds be pad to someone other than the beneficiary’s heirs if the beneficiary survives the insured. Some insurance company includes common disaster clause or time clause, according to this the beneficiary must survive the insured by a specified days, such as 30 or 60 days. If the beneficiary does not survive that period then the policy proceeds will be given as if that the beneficiary deceased the insured.

In most cases the primary beneficiary makes the claim. In US in case of conflicting claims the insurance company can take the help of an interpleader.

Interpleader is a procedure under which an insurance company that cannot determine the proper claimant may go to the court in order to seek advice or decision. The court may hold the policy proceeds and would release the insurer from any further liability. The court would then judge the rightful owner. In Canada, for common law system the insurer pays to the court and then the court judges the proper recipient. This is known as payment into court. In Quebec, an insurance company may to the Minister of finance.

The Minister holds the proceeds until the court settles the rightful recipient.

Determining the Amount of the Death Benefit: - To calculate the policy proceeds the examiner will add certain things and would deduct other things. The examiner first adds the following items:

 The amount of any basic death benefits payable ( In most cases this is equal to the face amount. If the policy was in force under the reduced paid-up insurance nonforfeiture option then the basic death benefit may be reduced, also if the insured sex was misstated.)

 The accidental benefits payable.

 The accumulated policy dividends, including interests.

 The face amount of any paid-up additions.

 The amount of any unearned premiums paid in advance.

After adding these, the examiner deducts the following things to determine the final proceeds payable.

 The amount of any outstanding policy loans.

 The amount of any premium due and unpaid. [This item appears if the insured died during the policy grace period before the premium has been paid.

Payment of Policy Proceeds.

The insurance company requires the recipient of life insurance policy proceeds to sign a written document, known as release. By signing this document, the claimant states that he has received full payment of his claim to the proceeds of a life insurance policy and that he releases the company from all sort of claims. In order for such a release form to be valid and binding on the claimant, he must have the legal capacity required to provide the release. Claimants who are minors or does not have sound mental capacity do not have the capacity to provide a release. One way in which the insurance company can obtain a valid release when the beneficiary does not have the legal capacity, is by paying the proceeds to a court-appointed guardian. The expenses for appointing a guardian by the court are borne by the claimant. In some situations where policy proceeds are payable to a minor, an insurance company may hold the proceeds at an interest to a future date.

This is generally the day when the minor reaches majority or the court appoints a guardian who can give a valid release to the insurance company.

Special Claim Situations.

There are policies that may contain exclusion criteria. The claim examiner may pays attention to death claims where the policy is contestable, the policy provides accidental benefits, the insured disappeared or the beneficiary is responsible for insured death.

Policy Contest: - If any policy contains misinterpretation, then the insurer has the right to avoid the contract during the policy’s contest period (which is usually 2 years from the date when the policy becomes effective). Insurers in Canada have the right of canceling the contract at moment of time based on fraud contracts. If the claim examiner has enough ground to prove the charge of material misinterpretation, then the insurance company may cancel the contract and may refund the premiums paid for the policy. Typically, the claim department consults the legal department of the company before contesting a policy on the ground of material misinterpretation.

Accidental Death Benefit Claim: - When a claim for accidental death benefit comes to an insurer the claim examiner will determine whether the claim falls under policy’s definition of “accidental”. In order to validate the examiner may ask for the following:

-1. Proof of loss. 2. APS. 3. Autopsy report.

The examiner may demand the above documents in case where: - a) unusual circumstances surrounds the death of the insured; b) the policy provides accidental benefit; c) the insured dies within the contest period of the policy.

Disappearance of the Insured: - When a claim appears against the disappearance of the insured the claimant does not have enough proof to support his claim. In this situation the insurance company cannot pay the proceeds. The claimant has the right to go to the court to declare the insured as dead. If the insured disappeared under circumstances that made it likely he is dead, then the court may be willing to find that the insured is dead. If the insured disappeared without explanation, courts typically will find that the insured is dead or presumed to be dead only if (1) the insured has been missing for certain period of time, typically seven years (2) a diligent but unsuccessful search has

been done for the insured (3) no one has had communication with the insured since he disappeared. Upon receiving the court order the insurance company may pay the proceeds to the claimant if the policy is in force to the presumed death of the insured.

Thus when an insured disappears the beneficiary, the policy owner, or any other interested party will have to pay the due renewal premiums that will be due to keep the