A New York and New Jersey Lawyer Who Represents Policyholders and Beneficiaries in Life Insurance Denial Cases

I came across a personal finance advice column where the author responded to a question from a prisoner who obtained life insurance. After reading the prisoner’s letter, I justĀ  had to post it on here.

Basically, the prisoner while incarcerated applied for and received a life insurance policy. He was then notified sometime later that prisoners are not allowed to have life insurance and his policy was canceled.

Besides its value as a “weird news” piece, this is an amazing account (if true) of a life insurance transaction because it shows how applications are not carefully evaluated by insurance companies. I have written on numerous occasions about how life insurance policies have been rescinded based on alleged material misrepresentations about health and financial information in the application, and how insurance companies virtually always assume that it is the fault of the applicant and not its own sales force. But, in this case, how could the policy have been issued to a prisoner?

One thought that I have is that the prisoner applied online for the policy. There are online applications–perhaps you have received one in your spam email folder–that only ask about 10 questions, which, if answered properly, will get you a policy of insurance. Maybe the prisoner completed one of these applications, paid his premiums, and it was only later on that the insurance company caught on that its insured was living in the dangerous confines of a prison and decided to rescind.

In any event, this is a real life example of how it can be the fault of the insurance company when there are “misrepresentations” in the application.

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