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Steph W | Can someone take out a life insurance policy on a mentally retarded person who didn't know what he was signing |
This person was mentally retarded (52) and died of brain cancer. HIs brother (an attorney) took out an insurance policy for the 52 year old. The 52 year old did not really know what he was signing. The amount of the policy is unknown. Is this insurance fraud? |
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mkulda
|
This is completely legal.
It is completely legal for someone to take out an insurance policy on somebody else and pay the premium.
Some states do place restrictions on this however, under what are called 'insurable interest' laws....in other words....you have to have some sort of connection to the person being insured.
Companies routinely take out life insurance policies on their own employees without their knowledge.....what is called corporate owned life insurance (or COLI) for short. They get to deduct the premiums and not pay tax on the proceeds when the employee dies.
Now, if the brother took out the policy claiming the mentally retarded brother was healthy, when he knew the brother to have brain cancer.....that is insurance fraud. |
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Oh Boy!
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First, you can't take out an insurance policy on anyone you want, even if you pay the premiums. You have to have an 'insurable interest' in the individual.
Second, why is this wrong. It's entirely possible the brother did it for estate planning and tax reasons; he may have bought whole-life insurance which has an investment element to it which might provide for his brother if the competent brother pre-deceased the other. There are 100 legitimate reasons for this. |
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glenbarrington
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It depends, if the brother was functioning as the retarded person's legal guardian, it's probably legal and it probably didn't even require the insured's signature. (We don't need a signature to insure a child's life)
If I were the legal guardian of a retarded person and as such responsible for their bills and care, I would also take out a life insurance policy on that person. The retarded person probably won't be able to leave much of an estate, and when they die, a reasonably sized insurance poicy will pay for a funeral and maybe even reimburse at least some of the guardian's out of pocket expenses. Have you priced even a cheap funeral lately? do you know what the brother has spent over the years on his brother's behalf? |
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Hadley
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It sounds questionable at the very least, and possibly fraud.
The person must have an insurable interest in order to take out life insurance.
What is an Insurable Interest as it relates to a Life Insurance Policy?
When you buy a life insurance policy there must be an insurable interest on the person being insured on the life insurance policy.
Types of Insurable Interest for a Life Insurance Policy:
Your Own Life - Every person has an unlimited insurable interest in his or her own life. The insured person can choose whoever they want to be the beneficiary (who the proceeds are paid to upon the insured’s death) of their life insurance policy.
Parent and Child, Husband and Wife, Brother and Sister - All have insurable interest in each other, because of blood relation or marriage.
Your creditors - All creditors may have an insurable interest in you if you owe them money. The creditor can be the beneficiary of your life insurance policy for the amount of any outstanding loan.
Business relationships - May create an insurable interest. An employer may insure the life of an employee, and an employee may insure the life of an employer.
Insurable interest must exist at the time the life insurance policy is purchased. However, for a life insurance policy, insurable interest is not required at the time of loss.
Example: - A man may insure the life of the woman he is engaged to. If they marry and then are divorced, he can continue paying the premiums. If his ex-wife dies after the divorce, he would receive the death benefit.
Review:
All of the following may have life insurance beneficiary insurable interest status:
Children of a parent, Parents of a child, Husband for a wife, Wife for a husband, Creditor for a debtor, Employer for an employee, and Employee for an employer.
In order to purchase a life insurance policy, the person buying the policy must have an insurable interest in the person insured on the life insurance policy.
The question here is two part:
1) Did the attorney rely on the mentally retarded person for financial support?
2) Did the mentally retarded person know what he was signing and understand the contract?
Both answers may lead one to believe there was not a true insurable interest and the insured party did not know what they were signing.
I hope that helps! |
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Matthew V
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Yes, it is possible. No fraud needs to be involved. Assuming the brother was the "guardian" and had full privilege, the 52-year old can be the insured and the brother can be the owner and beneficiary. However, I am used to situations where the brother (an attorney) would take out a large life insurance policy on his life to be paid to a trust that would be used for the health, benefit and welfare of the 52-year old. Perhaps that was done, too. There seems to be insurable interest either way. |
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cobra242003
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Well it all depends on the company and the policy. There are a lot of if's in that question. Some companies have policies that you can take on a person without them knowing but they are usually put on as a rider to another policy. Most normal policies the person would have to know what they are signing. Did the brother take it out on him when he had the brain cancer. If he did he paid a fortune for it or got a graded death benefit policy (which are not that great as far as the death benefit goes) Insurance Fraud? probably not but if the company found out about that they would probably cancel the policy depending on what type of policy it is. As far as insurable interest goes if the brother was taking care of him he had insurable interest. Hope this helps. |
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mbrcatz
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Probably not. If the man was legally mentally retarded, then he has a guardian. At the age of 52, if neither of his parents were alive (very likely) than his guardian is likely his brother, the attorney. As guardian, the brother has the right to sign for him. |
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Joy M
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Usually, if one person in a contract was not in a state of mind to be making a contract, the contract is voidable or invalid. |
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send_felix_mail
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Dogzilla is correct. This person would not have to even know about this, and likely didn't sign in.
I have a life insurance policy on myself....or should I say my dad has one on me. I didn't sign it. I was a baby. |
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mixershaun
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possibly, if he had mr and had to sign it its probly not legal because of his mental state |
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Mopar Muscle Gal
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No.. its legal
anyone , anywhere can take out a insurance policy on anyone they want
the insurance company doesn't care as long as they get their premium payment |
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Daniela
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OH my god..that is wrong..I know there is has to be laws against that but its knowing how to do it..no one should take advantage of someone like that.. Well, how has his brother went about the money.I hope he is using the money for donation agains cancer..even though it is wrong to take advantage of his brother like that some good could come out of the money..you know.. |
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Dogzilla
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Anyone can take out an insurance policy on anyone that they wish to. They just have to pay for it. The insured would not have to consent or sign for it to be put into force. |
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yejo
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The contract is null and void. A person should know what he is signing. |
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