I started Insurance Blog by Chris™ because I have a passion for insurance. Here at the blog, our job is to educate and inform people about the best insurance for them. Since then, we have grown into national brands with a large team of researchers helping people understand all forms of insurance.

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Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health insu...

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Reviewed by Rachael Brennan
Licensed Insurance Agent

UPDATED: Dec 17, 2019

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Do life insurance really pay out their claims?

While my typical answer is a resounding “Yes,” rare denial stories like the one below do happen.

In this article, we’ll cover why this widow’s payout was rejected and what we can learn from this.

Utah Widow’s Payout Rejected in Husband’s Cop Shooting Case

American General Life Insurance Company steadfastly maintains its refusal to pay out on a life insurance claim to the widow of the man shot by police in Centreville, Utah.

Here’s how the story unfolds.

Vincent Farrand took out a life insurance policy with AIG in 2011 with a face value of $500,000.

He named his wife Molly Farrand as beneficiary.

In 2014, which was 3 years later, police were called to the couple’s residence. Mr. Farrand appeared to be intoxicated and was carrying a handgun. Police allege they told him several times to drop the weapon.

While walking toward a gate in the backyard, police contend he continued to carry the gun and was mumbling something similar to ‘Shoot me. You’re going to have to shoot me.’ Farrand was eventually shot and killed by police.

The autopsy of Mr. Farrand also revealed that he had 0.21% alcohol content at the time of his death.

Molly Farrand contends that her husband was in the process of lowering the weapon. It should be noted that it is legal to carry a handgun in Utah because it is an ‘open carry’ state. She filed a civil action against Centreville for $2 million dollars.

The municipality settled out of court for $127,000 but made clear that it did so with no admission of fault of the part of the police officer.

Ms. Farrand submitted her life insurance claim to American General who denied the claim.

In a letter to her dated August 18, 2014, the company claimed that her husband was suicidal and legally impaired.

Subsequently, a suit was filed by Ms. Farrand’s attorney for the face amount of the $500,000 life insurance policy.

“Suicide By Cop” – A Tough Decision for an Insurance Claims Department

Many life insurance experts are a bit perplexed by AIG’s refusal to pay the claim.

When does the issue of suicide become an issue?

The majority of life insurance policies clearly include suicide as an exclusion from paying out a claim. The problem is, this exclusion has a 2 year limitation. If an insured commits suicide more than 2 years after the policy came into effect, the life insurer legally has to pay the claim.

Furthermore, why does drunkenness affect a payout?

In this instance, even if Mr. Farrand was trying to commit ‘suicide by cop’, the incident took place 3 years after his life insurance policy came into effect. The gun he was carrying is not relevant because it was his legal right to do so, nor is the fact that he was intoxicated at the time.

The bottom line is, it appears that AIG was in the wrong in these particular circumstances.  They do not appear to have any legal basis for not paying the claim.

Note: One possible explanation for AIG’s refusal would be if this was an accidental policy (which only pay out for accidental deaths.)  In that case, the alcohol and possible suicide would both be grounds for possible denial.

Many readers might think – ‘Well this is typical isn’t it?’

Actually, no.  The majority of life insurers do pay their claims. As with any policy, there are exclusions that apply, such as being untruthful when you apply for life insurance or engaging in an activity which is especially hazardous for example.

If you want to learn more about whether life insurers pay their claims then you should read this article “Do Life Insurance Companies Really Pay Their Claims.”

We think you will be pleasantly surprised!