Unfortunately, our clients have died of all sorts of things, road accidents in foreign countries, misadventure, suicide, you name it. The recent news surrounding Gerry Ryan bothers me in several ways, firstly being that most of the headlines surrounding his life assurance payout are based on supposition and assumption.
That he took drugs, or may have had extreme stress leading to it are not the only deciders. The main things that usually jeopardise a claim are non-disclosure of drug use and/or any associated mental health issues eg: depression (which I am not saying he had, just that it is a common non-disclosure in the same way that nobody ever admits to using drugs on their proclamation form)
One life company has c. €1.5m on cover, if there is a €5m figure it is across other companies so (if that higher figure is anywhere near true) it may be that one company will pay and another may not, but then there is a precedent set for payment, obviously all of the factual medical evidence must be put together first.
This wouldn’t be the first popular myth about what a life assurer will and won’t pay out on. Life companies will generally pay out on suicide (after 12 months or generally ‘month 13 onwards’) the stance being that they don’t want people to take out cover then kill themselves straight away. My read of it is that the coroner didn’t say it was ‘drugs overdose’, it was all factors put together, and the exclusion clauses are fairly implicit in interpretation, meaning a non-payment verdict is not an automatic given.
In this case it was a heart attack, that could have been stress related, stress is a leading cause of heart attacks and to prove otherwise will not be easy, that stress may or may not be due to drug use. Overall my take on this is that any claim will go through.
You are underwritten on the day you take out the cover, so the disclosure must be on that day only, and if you start to take any drug after that it is subsequent to the risk underwriting but not the life assurers liability of that risk, I’ll try this in plain English…
Look at the case of a smoker – albeit a legal drug- if you don’t smoke then you start to smoke cigarettes the life company can’t ‘un-underwrite’ you, it could cause complications in the claim if you die of lung cancer and they find that you smoked, but the weight of proving otherwise is not with the deceased persons beneficiaries, it is with the life assurer.
Misadventure is often covered by life companies, this could equally be drinking too much alcohol, or climbing a tree and falling off, and while you can’t make a call on this one it isn’t fair to say that non-payment is the likely outcome.
I am especially surprised that any life company (as Aviva have gone on the record with) is publicly stating that they wouldn’t pay out in the case of alcohol/drugs being a factor, because that means several things: big ticket business won’t go to them, and as a broker we now have an issue with placing business there given that people die of all kinds of things which we know because we have seen it ourselves through the years as previously mentioned.
Much of this is total speculation by the papers, until the full report and investigation is completed by the risk benefits department of wherever his insurance is held (and the figure of €5 million is questionable: it was given as an ‘upper limit’, and from what I can gather the likelihood is that it’s much less than that amount) we won’t know, nor can you look to specific get out clauses and extrapolate the news into a final decision.
As for any insurer that doesn’t pay out, I think the bad PR might be as pricey as the payout.