The Alberta Insurance Council has fined Sasha Butts $500 after the agent submitted a signed application for life insurance which answered ‘no’ to all questions about insurability, for a client who was in an intensive care unit with a brain injury.
The agency Butts worked for filed a complaint and Life Agent Reporting Form after the simplified product was sold in October 2022 and the insured passed away 10 days later. When the death claim was transferred to the department responsible for post-underwriting, it was determined that were certain details made known to the insurer, it would have declined to issue the policy. The insurer cancelled the policy.
During the investigation, Butts said she was made aware that the insured had COVID-19 twice in the past, which required hospitalization, but had no serious implications. She also said she was aware the insured had diabetes but was advised that it was medically controlled.
Hospitalized for congestive heart failure
In reality, once the patient’s files had been analyzed, it was determined that the insurance application, signed on October 11, 2022, was signed while the insured was hospitalized, with a brain injury, following a cardiac arrest. The insured had been followed for congestive heart failure, requiring multiple hospitalizations since 2017, had chronic kidney disease and was living with poorly controlled diabetes. “This information should have been declared,” the decision states.
“Council is of the view that the agent failed, in her role as an insurance agent, to ensure that the insured understood the questions on the insurance application,” the decision added, noting that there was a language barrier between the policyholder and the agent.
“Council finds that the agent is guilty of misrepresentation,” they add. “The agent recklessly submitted a signed application for life insurance while the insured was hospitalized and all insurability questions were answered no.”
