Insurance for HNW clients: Putting a claim through

Insurance brokers resolve challenges in claims for high-net-worth clients with a combination of clear communication and attention to detail. Life insurance claims present fewer challenges than long-term disability claims.

Brokers can head off potential issues while putting together the policy application. Insurance claim managers see non-disclosure at the root of many of the difficulties that arise in the claims process.

For example, a client goes scuba-diving several years before the application is drafted and the broker omits this detail because it seems dated and irrelevant. That could be construed as non-disclosure and invalidate the contract. Though not a frequent occurrence, non-disclosure of details not connected to cause of death can lead to withholding of payment.

Notwithstanding diligence during the application, a delay can arise if the beneficiary named in the will is not the individual named in the policy, a situation that sometimes arises when the client remarries.

The legal implications vary from province to province, observes Susan St. Amand, a certified financial planner and president of Ottawa-based Sirius Financial Services, but payout delays are possible and may involve lengthy and costly negotiations. This scenario underlines the need for detailed note-taking and file-keeping, she suggests.

In the event of legal proceedings, the notes and files may prove that the client mentioned in conversation an intention to change beneficiaries but had not proceeded, perhaps due to time constraints.

Another challenge occurs when the client dies in another jurisdiction, as when a snowbird dies in Florida. This can involve getting detailed documentation from several doctors or medical institutions in the foreign jurisdiction, a potentially time-consuming and expensive process, St. Amand explains, adding that fees for reports will have to be paid in advance.

For the broker, that means alerting the estate executor to the possibility of a large bill against the estate and suggesting that the necessary funds be set aside. With CI or LTD claims, problems can arise outside of the actual claims process since the client may not be psychologically prepared for a diagnosis of cancer or other critical ailment.

“Any assistance you can give them to provide them with guidance and comfort around what the insurance carrier is trying to get is helpful on both sides of the equation,” St. Amand says.

This helps the insurer resolve the claim and helps the client in dealing with the stress of diagnosis. The broker may expedite the information gathering process by obtaining the client’s authorization to communicate directly with the doctor, and providing the doctor or even several doctors with a list of questions to be answered in letter form and attached to the claim forms.

“Facilitation of communication between parties is one of the most valuable roles we play at claim time,” she says.

An LTD claim can become a matter of negotiation when it becomes a residual claim. This occurs when a high-net-worth client suffering from a disability elects to continue working but with a reduced schedule. An individual serving as vice president of marketing and whose ailment impedes his performance in a family firm can make a claim for the cost of hiring someone to assume some of his responsibilities.

Similarly, some ailments that qualify for LTD, such as Alzheimer’s disease and cancer, can be progressive, meaning a transition over time from partial disability—during which the individual can delegate some responsibilities—to complete disability.

For the broker, this again means guiding the client, or, with the client’s authorization, communicating directly with the doctor about the documentation required. When an insurer declines a claim the broker and client have several choices, including litigation and case management, which may turn the tide in the client’s favour.

Dr. Raymond Rupert, founder of Toronto-based Rupert Case Management Inc., notes one case where two insurers declined claims for CI and LTD. The client had become confused and unable to work or function well for two years, but doctors had not arrived at a clear diagnosis that conformed to the language of the client’s policy.

“He couldn’t remember things. There was clearly a cognitive issue,” Rupert recalls. Rupert examined “four inches of medical files” looking for gaps in the analysis. Examination of the client’s background revealed a period where he played semi-pro hockey, and received several blows to the head.

Medical scans provided evidence of multiple areas of stroke in the brain—he had suffered hockey players’ concussion syndrome. His online journal provided further evidence. “He had developed several areas of damage that were stroke-like and the sum total of all of these strokes was this thinking disorder,” Rupert says. This work provided enough evidence to underpin the successful claim for the payouts.