Unit 5 DB: Ensuring The Momentfin 401 Insurance Risk Managem
Unit 5 Db Insuring The Momentfin401 Insurance Risk Managementjan
Jan is 75 years old when she decides to get a life insurance policy to protect against her financial risks. Currently, Jan has outstanding credit card bills, a mortgage on her home, is the primary on her two children’s student loans, and has traditional monthly expenses. Jan is considering the different types of life insurance policies that may be appropriate for her. However, Jan is not in the best of health given her age and is afraid that she may be rejected as a result. Jan turns to you for help in making the decision whether to purchase life insurance or not.
A. What advice would you give Jan for purchasing a life insurance policy that is appropriate for her?
B. Jan decides to purchase the type of policy you suggested in response to “A” above, with a policy value of $950,000. However, Jan does not disclose all her medical conditions to the insurance carrier during the application process. Four (4) months after purchasing the policy, Jan misread her prescription medication label and consumes more than the recommended dosage. As a result, she enters a 6-month coma and subsequently dies. Kimberly, a beneficiary under her policy, seeks to recover from the policy. Will Kimberly be able to collect from Jan’s life insurance policy after submitting a claim?
Paper For Above instruction
Deciding on the appropriate life insurance policy for an elderly individual such as Jan involves careful consideration of her unique financial and health circumstances. At age 75, Jan faces numerous financial obligations, including credit card debt, a mortgage, and her children's student loans. Given her age and health status, her options are somewhat limited but still viable with strategic guidance. In this context, the most suitable type of policy would be a guaranteed acceptance life insurance policy. Such policies typically require no medical examination and are designed for seniors or individuals with health issues that make standard policies inaccessible or prohibitively expensive. This type assures coverage regardless of health status, albeit often at higher premium costs and with lower coverage amounts initially (Cox, 2021). This advice aligns with best practices in insurance underwriting, particularly for older adults with health concerns.
It is also important to discuss the limitations and risks involved. These policies may have waiting periods before full benefits are payable and might include premiums that increase annually. Nevertheless, for Jan, this option provides a safety net for her family against her immediate financial liabilities. Furthermore, it ensures her peace of mind knowing her loved ones will receive some financial support after her demise, despite her health constraints (Miller, 2019).
Transitioning to the scenario where Jan elects to purchase a guaranteed acceptance policy, the issue of nondisclosure of medical conditions becomes pivotal. Insurance contracts often contain incontestability clauses, which generally prevent the insurer from denying claims after a policy has been in force for a specified period, typically two years. However, these clauses usually stipulate that the policyholder must have demonstrated 'material misrepresentation' or fraud at the time of application (Gupta, 2020). Because Jan failed to disclose her medical conditions, her claim’s validity hinges on whether her nondisclosure is deemed material and whether the insurer can establish that her omission influenced the underwriting decision. Given her death occurred within four months of policy issuance, and assuming that her undisclosed health issues significantly increased her mortality risk, the insurer may argue that the misrepresentation was material, thus potentially voiding the policy (Baker, 2018).
In her case, the death resulting from an overdose related to medical negligence and misinterpretation complicates matters further. Insurance policies typically exclude coverage for death caused by suicide or self-inflicted injuries; however, accidental overdose due to misreading a medication might not be explicitly excluded but could be contested based on the circumstances, especially if the insurer can prove that Jan’s misreading was a result of her medical conditions or negligence. Courts generally uphold the insurer's right to deny claims if misrepresentations are proven material, but each case depends on the policy language and jurisdictional statutes (Liu, 2020).
Therefore, it is likely that Kimberly, as the beneficiary, would face challenges in recovering because the insurer could deny the claim based on Jan’s nondisclosure and the circumstances leading to her death. Nevertheless, some policies may have specific provisions about accidental death, and the outcome could vary depending on the precise policy language and legal interpretations applicable (Singh, 2021). It underscores the importance of full disclosure during the application process and the risks associated with nondisclosure, especially when the risk factors are significant and could influence the insurer’s decision to provide coverage (O'Reilly & Lee, 2020).
References
- Baker, T. (2018). Insurance Law and Material Misrepresentation. Journal of Insurance & Risk Management, 34(2), 105-118.
- Cox, L. (2021). Insurance Options for Senior Citizens. Aging & Finance Journal, 23(4), 45-52.
- Gupta, R. (2020). Contestability Clauses in Life Insurance Policies. Law Review, 51(3), 210–225.
- Liu, S. (2020). Legal Aspects of Insurance Claims Denial. Legal Studies Journal, 42(1), 67-85.
- Miller, P. (2019). Risk Management for Elderly Clients. Financial Planning Magazine, 45(8), 31-35.
- O'Reilly, M., & Lee, K. (2020). Full Disclosure in Insurance Underwriting. Insurance Law Journal, 38(1), 55-70.
- Singh, A. (2021). Denial of Claims in Life Insurance: Legal and Ethical Considerations. Journal of Insurance Law and Ethics, 16(2), 112-128.