American General is owned by AIG, which so far has taken $134 billion in federal bailout money. (As you'll remember, they also gave $165 million in bonuses to the same geniuses in the business unit that helped crash the economy.)
Yet when it comes to paying out life insurance policies for much less than the controversial bonuses they gave, they're suddenly very thrifty indeed:
American General Life Insurance Co. markets its policies as protection for "the hopes and dreams of American families" — a promise Ian Weissberger took to heart during his losing battle with Lou Gehrig's disease.
But after the Cathedral City mortgage broker died in 2005, American General cancelled his life insurance policy and refused to pay his widow the $250,000 benefit.
The Weissbergers' premiums were paid up. There was no foul play suspected. There was no question Sheila Weissberger was the widow and sole beneficiary. And Ian's illness was diagnosed months after he took out the policy.
The problem, the insurer told Sheila Weissberger, was that Ian's application for coverage was incomplete.
American General concluded that he had failed to disclose conditions, including bipolar disorder and pulmonary disease, that, according to his doctors, he did not have.
For the company, which collected $2.3 billion in premiums last year, the amount at issue was minute. But it was no small matter for Sheila, 62, who reached a confidential financial settlement with American General earlier this year.
"I lost my house. I lost everything," she said in an interview. "It was very, very devastating."
More often than not, life insurers make good on policies, paying $38 billion in death benefits on individual policies last year. But what happened to Sheila Weissberger was not unusual. The claims of thousands of beneficiaries are denied or disputed every year — more than 5,000 last year alone — many for allegedly flawed applications, a Times review found.
[...] To stop abuses by insurers, most states long ago banned limitless rescissions, but in California and elsewhere, they are allowed during the two years immediately after a policy is signed.
Experts and consumer advocates say some insurers have turned that into a "gotcha period," seizing on flaws after claims are made that they could have looked for before issuing coverage.
"Regulators need to come down hard on companies that are rushing applications through in order to gain premium income without taking time to screen the risks, then using rescission to control payouts and increase profits," said Amy Bach, an advisor to National Assn. of Insurance Commissioners and executive director of United Policyholders, a nonprofit consumer group.
Industry representatives say the power to rescind policies and withhold benefits is essential and fair. Accurate information is "crucial to the agreement and to the actuarially sound pricing of the product," said Steven Brostoff, a spokesman for the trade group the American Council of Life Insurers.
Yet some companies deny benefits far more than others.
American General, which ranks 11th in national market share, withheld more money than any other life insurer — $36 million — in disputes of 79 individual death claims in 2009, including several rescissions.
The company, a Houston-based subsidiary of American International Group Inc., declined to comment on the Weissberger case. In a statement, the insurer said that its record should be considered in light of its size and that it follows "the standard that has been California law for more than 100 years."
Good thing we have the Republicans looking out for the best interests of all decent Americans, right?
I said, right?
Hello...?
"Whatever your particular problem is, I promise you, the Republicans are not the least bit interested in solving it. They are interested in two things, and two things only: making you afraid of it, and telling you who's to blame for it."
She should have known better than to marry someone knowing there was a possibility that some day he might die.
“If pigs could vote,
the man with the slop bucket would be elected swineherd every time,
no matter how much slaughtering he did on the side.”
- Orson Scott Card
why would their not paying out shock anyone? They never have any intention of paying out...I have NEVER heard of any life insurance policy that was on the level.
Government allowed organized crime.
These insurance companies are "people". They should be taxed like "People". If they can't afford to pay benefits to "People", but they have money to secretly donate huge sums (bribe) of cash to pols who will vote (bribe) their way, they should be forced to give it back in the forms of "contributions (tax) to us, we the people.
They send crooks to jail to "Repay their debt to society". I'm waiting for the "Repay" part
Anyone who has been in the insurance industry, Life OR P&C, knows what type of ethics AIG has had for ages. I seriously doubt they have many customers in the insurance industry.
When did contracts become re-negotiable at the whim of one of the two parties?
I think it started with major league baseball players deciding they would not honor their contracts unless they were renegotiated for more money.
Maybe 30-40 years ago.
And it's all been downhill since then.
"Sure, the contract SAYS we owe them that money. Now let's see if we can find a way around that."
And ALL American law has followed suit: "Here's the law. How do I get around it?"
"Rule of Law" ???
When will government of the people, by the politicians, for the corporations perish from this Earth?
Not soon enough!
if there is no penalty for breach.
I am not surprised whatsoever. As part of my duties to being an executive assistant I processed health insurance claims. The insurance business is in the business of not paying claims.
You don't make money paying claims - and they are all about making money.
That's what I just don't understand about folks who resist going to a non-profit health insurance scheme, at least 30% of your premiums would NOT be skimmed off the top to pay for Gulfstream jets and bonuses for @ssholes.
Republican...would we hear a real stink, and get it changed????? Surely, that 'insurance company' has no way of knowing they're going to screw over a Republican or not.....?????
Or is that particular insurance company going to check out to see what party affiliation their customers are...or just play 'Russian Roulette' and hope to god they don't get caught....
more buyer beware. the strategy don't honor the contract and force the consumer to use resources they may not have to fight/present their case. now the fine print more then ever reveals loop holes to take advantage of the consumers ie. health care insurnace plans
there ARE things such as 'death panels'. they are insurance companies, and always have been insurance companies. with (not unusual) unconscionable business tactics as displayed by the company in the example in this article, 'death panels' are alive and well (pardon the pun). they just arent in the Affordable Care Act as slandered by Half-Term Palin. if she'd pointed her finger at the insurance companies she would've been right. they determine, and have for a long time, life and death decisions (and after death decisions) for millions of people. but for Ms Palin the 'free market' is correcting itself with decisions like these made by health insurance companies. im going to conclude that its fine with her. status quo, business as usual, no reform needed. you betcha.
I know it wouldn't really work, but if the seller changes their mind about the product they are silling, then they should at least refund the money that was fraudulently taken. It might marginally reduce the profits from these scams. These guys do have physical addresses, right, rather than just a fake Nigerian email address? So it should be possible to at least find them.
Whatever happened to the Better Business Bureau
Or
Class-Action lawsuits?
Diabolus est Deus Inversus
to have a class action suit. As near as I can tell this is an isolated case.Now one or another of the parties here is not being entirely forthright. If AIG is playing such a nasty game then they are probably going to be very sorry for it. There isn't a civil attorney who wouldn't take this case and a jury would be very very sympathetic to the widow. Depending on jurisdiction they would have to pay serious punitive damages. Even worse, the publicity attendant to such behavior would cost them a lot more business than a quarter mil. I cannot speak to American law but where I live, even if they if the deceased had concealed medical problems, they would have to have related to the cause of death to invalidate the contract and still a possible action by the widow would lie for every payment they accepted knowing they had no intention to fulfill their obligations. That would depend on when they secured the medical information they are claiming invalidates the contractual obligation.
Hasa Diga Eebowai
but how many 'regular' people can afford them... and what do they live on in the meantime. Especially if they're up there in years.........they can barely afford the premiums for the damn life insurance as it is. My husband and I had to drop what life insurance we had on him, when we hit the 20-yr mark and had to pay PER MONTH what the total of what used to be THREE months.....
as long as he's working, we have some from there....but that's as long as he's working, or the shop doesn't close.
As a former life insurance sellsman I can tell you that it is a big rip off. They will charge the maximum that they can get away with and then when you die they will challenge your claim. If they find any way out of paying they will and not feel any shame.
The longer you have the policy the better for the insurance company because if you pay for many years you will have covered your own policy payout. If you take out a policy and die within a few years of taking out the policy you will be challenged.
If you have medical insurance you should die quickly. If you have life insurance you can't die. Got it.
We need insurance to protect us against insurance companies.It's not like we don't pay premiums for the insurance. Ethics don't appear to be corporate values. How sad.
My mom just died a month ago, and my trustee's just processed the paper-work for her life insurance, so I hope I don't also get screwed, 'cus I need the money, too...
The callous insufferable whelps that run these businesses should be keel hauled and if they live do it again. By the way it will not bode well for the scum because some sea creatures love blood.
and American General Life Insurance Co. Do not buy insurance from these companies since they have no morals. Every dollars that they are allow to steal is profit and their executives get a big fat bonus. The more they steal the bigger the bonus the executives get.
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