Marketplace: In Denial | CBC

by CBC News

12/11/2008

Transcript

CBC;
We are putting these dancers through a Marketplace test. It is not a test of their rumba, tango or cha cha cha. They are taking part in an elimination dance cause just like ballroom dancing the product we are testing is full of twists. All about who qualifies and who doesn’t. “How are you feeling today, are you feeling healthy?” “Yes”. The product with some fancy footwork is something you buy when you take out a mortgage. Insurance that is suppose to pay off your mortgage allowing you to keep your home if you get sick or die. But it is leaving a lot of people in the lurch and we want to know why. So does Leanne Santos, she and her husband Lewis wanted to protect their dream home.

Leanne;
“We just had everything we needed nothing more, just perfect”. They made the biggest purchase of their life when they bought a house in this Burlington, ON neighbourhood.  The ideal place to raise their two daughters.

CBC;
So when you saw this place you thought this feels right?

Leanne;
“Yah, it was the only place we looked at. When we walked in the model one and said this is great”. Like millions of Canadian’s, Leanne and her husband take out a mortgage $229,000 at TD Canada Trust. And they buy mortgage insurance just in case. “We just renewed our mortgage and then during the conversation the woman asked us if we wanted to sign up for mortgage insurance and my husband said yah you know I think we should do that”.

Quote prices of banks vs term life now

Three hours west in Chatham ON, Charmaine Sanal thought mortgage insurance was a good idea too. The mortgage on this house also from TD Bank was $112,000 and just like Leanne’s case Charmaine’s husband took out mortgage insurance.

Charmaine;
“I think he wanted to provide for me in case something happened to him”.

Leanne
“I guess we were being just like a boy scout being prepared for down the road”. Both families thought the extra cost for insurance was worth it.  “I think it was about $45.00 per month roughly”.

Charmaine;
“I believe it was around $19.00 a month. It was doable within our budget. And signing up for that coverage a breeze”.

Leeanne;
“Just read that over and sign your name and basically we will get everything going. Pretty easy” . Seemed likely that it wouldn’t be a problem. “Yah”. 

If Leanne’s and Charmaine’s husbands had bought insurance from a licensed broker, agents would figure out if they were eligible before they start paying premiums. But get this when you get mortgage insurance at the bank most of the time medical records are only scrutinized when it is time to make a payout. It is called “post-claim underwriting” . But actually qualifying for that insurance payout not so easy. To find out why I put Jim Bullock on my dance card. Bullock has been in the insurance industry for 35 years fights for families trying to get a payout and he says post-claim underwriting has its own spin.

Jim ;
“ The problem for the insurance company is underwriting costs money, it costs money to administer a blood test, it costs money for a urine test, it costs money for a chest x ray. What the insurance industry is doing in these mortgage policies is forgoing all that cost in every single one and only spending money on the few that die.

CBC;
“So in the meantime they are collecting everyone’s premiums and they may or may not be covered”?

Jim;
Well that’s the beauty of it they are collecting money on everybody and for a lot of them they are not really at risk. The most profitable business you can write is the business where you collect the premium but aren’t really at risk.

To find out how this works we make up our own application form for mortgage insurance based on what you get at the big five banks. A long questionnaire with a yes no answer. In the past five years have you been tested for, received any treatment or received any medical advice, taken medication for, required any follow up for, leukaemia...lupus..stroke...circulatory trouble....tumour...cancer...asthma....respiratory condition... liver or kidney disease... including paralysis? We get our test underway, pretty long questions, wonder if people read it more closely at the bank? Seems simple enough but forms like this can trip you up.

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Jim;
“Their is virtually no chance of completing it accurately. Put it this way I have never seen anyone do it”.

CBC;
“So for the general public would you say it is straightforward and easy to understand”?

Jim;
“It is easy to tell when a form is designed for consumers. They ask very short specific questions, have you ever had hepatitis yes or no. These application forms are the opposite of yes or no. They are opposite and there are no explanations”.

CBC;
“So how great do you think this is for the consumer”? 

Jim;
It’s terrible if you really wanted to develop the information correctly then take all these generalities and break them down into specific yes and no questions.

13 months after buying their insurance Charmaine’s husband Ron gets diagnosed with cancer, an inoperable tumour behind his eyes. He had to stop working.


Charmaine;
“It’s just a shock, a big shock”.

So time to submit a claim for that mortgage insurance. And Leanne’s husband Lewis 14 months after buying his mortgage life insurance he dies of a sudden heart attack.

CBC;
Do you think that could happen? He was so young?

Leanne;
“No and he was so fit right and he was so adamant about his health, like truly it didn’t occur to me:”.

CBC;
“Must have been a relief that thank goodness you had the insurance.

Leanne;
“Yes it was like awww my husband took care of me right to the end, now that is how it felt”.

So imagine her shock when she opened her mail a few weeks later and there was a letter in there saying my claim had been denied. 

Leanne;
“So I ran into the bathroom cause I though I was going to throw up, just sort of regrouped and tried to figure out what was happening.  You know my heart was just like what one tragedy now this, it was too much for me to take. I think most people assume once you have filled out this health questionnaire that if they accept your application and start taking out your premiums that they have qualified”. 

Jim;
“Yes I know they do and they are wrong. All they have qualified to do is pay premiums. After they die there is a test to see if they actually have insurance”.

Charmanie;
“If they are digging into the claim after the fact they should be right up front and do it right in the beginning that way everybody knows what is going on”.

Leanne;
I don’t think people should have to worry about this in the midst of losing their soulmate have to worry about this as well. I really think this is something that needs to be taken care of before”. 

So why were Lewis’s premiums accepted and his claim denied? He had been on a heart drug for 10 years and sure enough we look at the form and there it is. It asks about the last 24 months medication and heart disease but Lewis checked the no box.

Leanne;
I don’t know what my husband was thinking but in my mind when I read it, the first thing you see is within the last 24 months, none of that had happened to him in the last 24 months”.

If a license broker had sold that life insurance, it’s likely the form would have been thoroughly explained.
“So nobody ever asked your husband how’s your health, have you ever had a serious ailment, none of that discussion”.

Leanne;
No not to my knowledge there was no talk of that”.

So how easy is it to misunderstand the application form for mortgage insurance? That is exactly what we’re testing back on the dance floor.

CBC;
“So if Jim asks you a question and the answer is yes you must leave the dance floor”.

They all think they have qualified for mortgage insurance since they didn’t tick off yes to any of the health issues on their form.

Jim;
“One of the questions on the form was have you had digestive or intestinal disorders?

What did that long question really cover? Items that might disqualify you on the dance floor or at the bank.

Jim; 
“How many have you seen a doctor because of diarrhea or vomiting? Maybe you had monte zommies revenge on a trip, or maybe you had the flu so bad you had to see a doctor? If you did please leave the floor. Oop we lost one”.

Remember the object is to keep dancing, keep qualifying for mortgage insurance as long as possible. 

Both Leanne and Charmaine’s husbands bought mortgage life insurance from TD. It is underwritten by Canada Life one of the biggest insurance companies going. Last year pushing insurance products made TD more that a billion dollars.

CBC;
“We had lots of questions for TD but they won’t talk to us instead they sent this email that said”, “mortgage insurance is a product that is easy to apply for and understand”

Since TD won’t talk we tracked down a guy that worked there for six years, Andrew Willen. These days he runs a movie theatre but as a financial advisor he was told to push the mortgage insurance and he did to more than a third of his clients.

Andrew;
“ It was always important to meet your sales goals as a sales person at the bank because that would determine your bonus, performance appraisal things like that”.

CBC;
“How did TD get customers to buy in”.



Andrew:
“ Andrew says one trainer actually suggested he mention heart attacks, the high rate of cancer. If people are concerned they could fall ill with cancer or some other type of disease then it would make it easier to sell insurance”. “This sales tactic was recommended too, someone suggested that if someone refused to take the insurance that when they are signing the waiver, they have to initial on a waiver to wave the insurance coverage to say so by initialling this you and your family will not be protected in case something happens to you”. 

CNC;
“And why was that”? 

Andrew;
“Well it was a last ditch effort to get them to sign for the insurance”.

But one false move on the application could put you on the sidelines.

Jim;
“Have you ever been tested for high blood pressure?  The test for high blood pressure is where they put the cuff on your arm and they pump it up and they read your blood pressure. Well who hasn’t had that? Everybody”.

CBC;
“Who would qualify if you read this form”. 

Jim;
“You are catching on”. 

Slowly but surely our dance floor empties out.

Jim;
“Have you ever been tested for cancer? In the last 5 years have you had a mammogram? Or a pap smear? Or men if you had a PSA test for your prostate? Please leave the floor. It is not having those tests that disqualify you but you have to say you had them. Misunderstand and answer incorrectly insurance companies consider that fraud”

CBC;
“So if I misread some questions and don’t think I have had a cancer test because I had a mammogram, that would count”?

Jim;
“Yes that’s fraud yes.

CBC;
“So you are saying they go through your application form then they check your medical records and they look for little gems they can find with what might conflict with what you said on your form”.

Jim;
“Of course it is part of the claims process”. 
That’s what happened with Charmaine’s husband Ron, just like Leannes case TD denies the mortgage claim. 

CBC;
“You thought you were covered’?

Charmaine;
“Exactly”.

CBC;
“Are you kidding me, and for the reasons they stated it would have nothing to do with cancer. Just seems rather odd to me”. 

It was upsetting for Ron too. Ron is still fighting his cancer and fighting the insurance companies decision. TD said Ron didn’t tell them about high blood pressure and elevated cholesterol but they found it mentioned in his medical file.

CBC;
“So were you not told by your doctor”.

Ron;
“ I was never told by my doctor I had anything wrong with me. I was in good health”. 

CBC;
“So they are saying you filled this out misleadingly”?

Ron;
“Misleadingly yes. Too my knowledge I filled it out properly”.

We take a look at Ron’s application form and there it is high blood pressure and elevated cholesterol and sure enough he checked off the no box. But Ron says that’s because he had no idea what his doctor wrote down. So he told what he thought was the truth.

Ron;
“If they want to sell this kind of insurance they should have a nurse or someone right there saying okay let me check your blood pressure, let me check your cholesterol and then within hours we will let you know if you qualify for this insurance’. 

And Ron is not sick from blood pressure or cholesterol he is fighting cancer . He is too sick to work and Charmaine’s pay cheque isn’t enough. They have maxed out their credit cards, borrowed money from friends and family. They are trying to hold on to their house.

Ron;
“I’m thinking too how am I going to make next weeks mortgage payment. I’m not working and who do I ask to borrow money from just so I don’t lose my house. I don’t want to see Charmaine out on the street”.



CBC;
“We’ve got a widow who might lose her house, we have a man fighting cancer who might lose his house, what’s going on”? 

Jim;
“Well what is going on is the system is working exactly how it was intended too . They are asking very difficult questions that a consumer could not possibly figure out by themselves. The form is designed to be completed with the help of an agent and they are not providing trained agents to administer the questions”.

CBC;
We asked TD and Canada Trust how many claims they deny every year. Turns out it’s an industry secret they won’t divulge. But TD does tell us it is not up to bank employees to tell clients if they really qualify for coverage. Saying if customers have questions about personal health issues or per-exsisting medical conditions we encourage them to speak to their doctor. And this former bank employee says he didn’t get much training on the product accept on how to sell it.

Andrew;
“The way they trained us or talked about insurance it was very simple take the insurance and if something happens to you it will get paid out it’s that simple.

Charmaine;
“They should know the extent of the product they are selling and if they don’t they should make it their business to know it”.

In the US some states have banned post-claim underwriting but here its allowed and only one province has done anything to protect consumers. Alberta, they made it mandatory for anyone selling insurance to be licensed and the banks fought it all the way to the supreme court. TD bank says people who fill out these forms have to take responsibility for the accuracy of the information.

CBC;
“So in other words it’s your fault you are being denied”?

Ron;
“Well I’m glad they think so cause I said that everything I put on that application as far as I knew was it. I was never told by any doctor that I was sick of any sort. To the best of my knowledge I was a ok”. 

Just like TD, Canada Life will not talk to us, so we send them this questionnaire. In the past 4 weeks have you agreed to an interview with CBC Marketplace regarding the perceived difficulty, explained why questions are unclear, how many policies you sell, how much in premiums you collect and how many claims you deny every year. Canada Life hasn’t returned our form.

Leeanne;
“Fortunately for me because I work for myself I can work around my girl’s schedules and that kind of thing but definitely I need to work”. 

Before being a stay at home Mom Leanne worked in interior design. A profession she has had to go back too since Lewis died. 

CBC;
“Do you ever think about your husband and if he knew what you were going through”?

Leanne;
“I wonder all the time is he looking down and I know what he would say, stand up for yourself but you have to say stand up for yourself right, look after the girls and everything else will come”.

When TD and Canada Life denied Ron’s claim they refunded his premiums and they may have thought they were comforting him with a another piece of news.

Ron;

“They said don’t worry Ron you still have life insurance in other words they were saying if you want your house paid off maybe you better give in to this disease”.

CBC;
“What was that like?

Ron;
“It hurt, it really hurt I’m not a crier but I cry every night now. I don’t know what tomorrow brings”.

One thing it brings is a law suit. He is suing Canada Trust and TD bank to try to keep his house. And so is Leanne.

Leanne;
“I just hope in the end that honesty prevails, my husband was an honest person and just tried to do the right thing. I just really hope that they do the right thing”.

And the test on the dance floor. We started this off with a dance floor full of people who were confident that they qualified.

Jim;
“Yes I’m sure they did”.

Yup just six people who might really qualify for coverage. Proof that insurance isn’t always a sure thing. 

The bottom line before you sign. Consider one insurance policy to cover everything. Consider using a licensed insurance broker.

Jim;
I would like to see it sold by people who know what they are doing so that the life insurance is actually valid. Check medical issues up front. Check fine print for time allowed to change your mind”.