Posted on by Judy

response to the outcome of this case The Agent sold Dr. and Mrs. Jones two 20-year term policies in 2000, each having a $5 million death benefit. Dr. and Mrs. Jones are high wealth clients with many insurance and investment products in their portfolio. The monthly premiums for these particular policies were $300/month for Dr. Jones and $250/month for Mrs. Jones. Their policies were set up to pay the premiums through automatic monthly bank account deductions. In 2010, the Joneses wished to replace these policies with two new 20 year term policies in order to extend their coverage period. Because the Agent was no longer affiliated with the original term life insurance company, he could not instruct that carrier to cancel the policies nor cancel the bank drafts. When the Agent met with the Joneses to complete the paperwork for the new term policies, he gave them verbal instructions to contact the original insurance company to cancel the policies. He also instructed them to stop their automatic payments from their bank. The Agent recalls that Dr. Jones was a little concerned that the new policies had a new two year contest ability period associated with them and was considering holding on to his old policy until the two year period was completed. The new policies then issued and were also set up to be paid by automatic monthly drafts from the account. About 5 years later, the Agent received an angry phone call from Dr. Jones. He had noticed that the $550 monthly drafts were still going out of their account for the original term policies. He claims that the Agent told them that the Agent would cancel their policies for them. Dr. Jones is demanding that the Agent refund to them all the payments they made toward the original term policies since 2010 ($33,000). The Agent is adamant that he instructed Dr. and Mrs. Jones to contact their carrier and bank to take care of this since he did not have the authority to do so. There is no documentation in the Agent’s file from 2010 that would evidence that he instructed the Joneses to cancel these old policies on their own.

I want to illustrate this question with my own experience as an insurance agent.
In this industry it is mandatory to proceed for any changes only in writing. Any verbal communication or any word of mouth promise will bring problem in future. Like in this case there was not significant documentation done nor agent put all the instruction on paper to have clear understanding of what the client wants. So in this scenario client can not clam any part from the agent. It is very important for all the things to be documented in the insurance industry otherwise you cannot claim for anything in future.
If agent is having portfolio of his client then he must have all the current clients policies and all the instructed documents to make any sort of changes in that. Because in case in future any issue occur then agent can show all the related documents to the client.
In this case although mr. Jones has stated his agent to make changes but since no documentation was done nor any written conversation was signed by the client so no claim can be done by the client. And moreover agent instructed Dr. and Mrs. Jones to contact their carrier and bank to take care of this since he did not have the authority to do so. There is no documentation in the Agent’s file from 2010 that would evidence that he instructed the Joneses to cancel these old policies on their own.
 
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