Insurance firm to McCarten: Call us

Terminally ill union boss Matt McCarten may not have to sell his life insurance policy after all - a clause in his contract could see him paid out while still alive.

Mr McCarten yesterday told the National Business Review he was open to offers from people wanting to buy his $230,000 policy and he hoped to use the proceeds to settle his failed company’s debts of $153,000 – owed mostly to the IRD.

The policy's premiums were being paid for by the collapsed company Unite Support Service, but liquidators said they were unable to claim it as an asset because it was in Mr McCarten's name.

The left-wing commentator yesterday said he always intended using proceeds of the policy to settle the company's debts and was keen to sell it.

“If anyone wants to buy the policy I’m open to offers. They can invest in my death, bet on it, and give the tax department the money that I owe them,” he said yesterday. “I’m aware that I’m running against the clock and I’m determined not to die in debt.”

But Mr McCarten's late embrace of the viaticals market may not be necessary as insurance figures told NBR most life insurance policies had “terminal illness benefit” clauses that paid out early in the event of a terminal diagnosis.

Tower Insurance chief operating officer Michael Boggs said his company’s policies would pay out in full and immediately if a customer received a terminal diagnosis.

“If a person has a very high likelihood of death we’d pay out the face value straight away – it’s a terminal illness benefit – and it’s certainly written into our policies,” he said.

Mr Boggs said the market for buying and selling life insurance policies was relatively small in New Zealand. “It’s not a big volume here, although we don’t have to be involved in the process outside of changing the name of the beneficiary," he said.

According to liquidators' reports for Unite Support Services prepared by the Insolvency and Trustee Service, Mr McCarten’s policy is held by Sovereign Insurance.

Emily Hanna, corporate communications manager for Sovereign, said privacy considerations prevented her from confirming Mr McCarten was a customer.

Ms Hanna said most Sovereign policies had early payout clauses for those near death.

“There are terminal illness benefits with most of our current policies. Some of the wordings so vary, but generally a payment will be made if someone is diagnosed to die within a year," she said.

Mr McCarten told NBR yesterday he was not expected to survive the year and in September his doctors gave him only a 0.8% chance of surviving.

Without directly asking Mr McCarten to call her, Ms Hanna said: “If the situation is as it’s been reported in the media, I would encourage Mr McCarten to contact his insurance provider.”

Mr McCarten did not reply to messages left today by NBR.