When A Client Dies

What do you think about when you learn a client has died? Many life insurance agents speak about the satisfaction they get from delivering the death benefits to the beneficiaries. But on more sophisticated cases, and even on those appearing to be simple, should the agent be concerned about whether the insurance work has been done correctly?

The question reminds me of how a very experienced lawyer used to worry when a client died. The worry was that the deceased’s will would have a flaw so bad that it would ruin the estate plan, cause unnecessary estate taxes and ultimately result in malpractice claim. The worry was so intense that he often could not even request the deceased’s file from the file room; when he did get the file, he had to muster courage just to look at it. It turns out his worry was for naught–his legal work had never been challenged–but he worried all the same.

Agents face a similar pressure. At death claim time, they want to be sure their work was done correctly. In the law, doing work correctly usually means performing the work to the standard expected of an agent in the community or to the standard to which the agent has held himself or herself out in doing business. For example, if agents in a community are relatively unsophisticated but the deceased’s agent held himself out as an estate planning expert, the agent probably will be held to the higher standard.

So, agents should probably feel the same tinge of worry as that of the experienced lawyer. Was the policy set up correctly? Were the beneficiaries properly named? Was an obvious estate planning method overlooked? What expertise did the agent claim when placing the business?

The question here is, what can agents do to avoid bad results when a client dies?

In my law office, as in an agent’s practice, we render personal services to clients. Ours are legal services, while agents give estate and insurance planning advice. In rendering these services, we train our employees to recognize and accept that people make mistakes, despite the systems we have to help ensure perfection. Our employees know that if they make a mistake and tell us immediately, we almost always can correct it. We say “almost always,” because as long as the client lives, we usually can fix the error, but, if the client has died, sometimes it’s too late for correction.

We also do not criticize employees for the mistake. Most times, the employee already feels badly enough about it. It is far more important to learn about and correct the mistake than to scold.

This same approach can be applied to an insurance practice. It requires openness and acceptance of everyone at the office, but it goes a long way toward helping avoid mistakes that cannot be corrected.

Having redundant systems is important, too. That way, if you forget to do something, hopefully someone else will also have that responsibility, so they will remind you. I tell my staff they can’t remind me too often of something that has to be done. As I have gotten older, I kid with them that this is ever more important!

If the work is done correctly, delivering the check should indeed be a rewarding, though not necessarily pleasant, experience. But if after the death the agent becomes aware of a possible error, and if the agent believes the error cannot then be corrected, here are some considerations.

o Contact the firm’s malpractice carrier with notice of the situation.

While no one wants to jump the gun, in general, the earlier such notice is given, the more solutions may be available. Remember the agent may not know about all possible solutions, and a claims expert may find one that the agent did not anticipate.