Friday, March 24, 2017

Does it make sense?

Last week, we noted the curious case of Joaquin Shadow Rams, who seems to have made a habit of collecting on life insurance policies he took out on family members (one hesitates to use the phrase "loved ones"). Last we heard, he was on trial for the murder of his year old infant son, on whom he had purchased a sizable ($500,000) life insurance policy.

Now, as then, we're going to focus on the underwriting aspect of this case, specifically:

"What rocket surgeon underwriter approved a half million dollars of life insurance on a toddler?"

Since that post was published, I've had a fruitful conversation with my underwriter at our primary life carrier, whose bottom line observation provided the title of this post.

In addition to the various issues we discussed previously, he explained that, if the father was, in fact, applying for multiple policies on his son's life, this would (likely) generate an "excessive applications" hit at the MIB (Medical Information Bureau), which tracks these over the course of several years (let alone one). This alone would have set off a red flag or three.

Alternately, if Mr Rams had purchased just the one $500,000 policy on his infant son, this too would have raised some eyebrows. As FoIB Jeff M noted in comments to the previous post:

"Every life insurance company that I have ever used required an amount of life insurance on the parents to be at least 2x that which was being applied for on a child."

My underwriter confirmed that, for the most part, this is true, but that New York has recently ruled that the child's death benefit amount allows at certain ages a face amount equal to the parents'. Still, there's a floor. We also discussed my observation that, if this was Bill Gates, Jr there might very well be justification, and my underwriter added that there may be other extenuating circumstances.

For example, he mentioned a case where the parents had no life insurance, but were applying for a large amount on their son (who, it should be noted, was not an infant, but a teenager at the time). When queried, it turned out that Dad didn't have coverage because he was uninsurable, and the primary reason they were seeking coverage on the progeny was to protect his future insurability. So it made some sense in that case.

Of course, the MSM can't be bothered to do even that much rudimentary fact-checking, so we have no idea how much - if any - life insured Mr Rams had on himself (there's no mention of a Mrs Rams).

The bottom line, it seems to me, continues to be that there were some highly questionable actions taken by whichever insurer is left on the hook for this tragedy, which apparently failed to ask "Does it make sense?"

[Many Thanks to FoIB Rob P]
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