It’s time that the federal government and our provincial governments’ insurance regulators took a firm stand against banks being allowed to sell mortgage life, disability and critical illness insurance in their branches.
I am aware of numerous client claims being denied, both when I was in the farm equipment business and having worked the last seventeen years as a financial advisor, that claims were denied by banks on flimsy technicalities. As recently as a few months ago, with the death of a farm client, I paid out the large death benefit to the family from the policy that was purchased from me; but two financial institutions they had had taken out loans with, covered by their creditor life insurance plans, both denied payment due to a claimed undisclosed medical issue. Yes – they did refund the premiums paid, a pittance compared to their outstanding loan balances; once again proving that big banks have no qualms collecting the monthly premiums from their customers, only to deny payment at the worst possible time, when someone is grieving over the death of a loved one.
I have paid out over $1.5 million so far this year in death claims, with most life insurance companies settling the claims within 30 days of receiving the claim paperwork. In 17 years, I have never had a death claim denied; I have had the odd one held up due to some administrative snafu. A major responsibility of independent advisors like myself is to help clients through this most traumatic period of events in their lives, to ensure their claim is settled and a cheque delivered as quickly as possible, light years ahead of what banks do at the time of a death claim.
They’re too busy investigating the deceased person’s medical history, to see if they can find any possible reason to deny payment of the claim. Yes, they may refund the premiums that were paid, a far cry from paying out the insurance death benefit!
As a member of ADVOCIS and also of an advisor forum group called “For Advisors Only”, I am going to make it my mission to make sure every denied bank death, disability and critical illness claim I become aware of is made public information so Canadians can judge for themselves how ethically and morally wrong the current practices are that our chartered banks are allowed to get away with!
They have unlicensed people in the banks coercing mortgage and loan applicants into buying a product that they don’t get a policy for, that they don’t own or control and have no guarantee of payment at the time of claim.
Plus the banks make themselves the beneficiaries of these policies which only cover the declining balance owing, while premiums paid are based on the original amount borrowed. The irony of this is that selling these products is one of the more profitable things that banks do.
So my advice to anyone taking out a mortgage, business loan, line of credit, buying a vehicle is to decline their coverage, buy from an independent life insurance advisor life, disability or critical illness coverage that you understand, own and have control of.