A life insurance company’s claim denial is not necessarily the final verdict and any wrongful life insurance claims denial can be legally contested.
Has your life insurance claim been denied?
Life insurance policies are purchased to provide security for our families and loved ones. However, if your life insurance claim is denied, you may find yourself unable to cover your daily and long-term expenses, exactly what your loved one had hoped to prevent.
The simple fact is that insurance companies gain monetarily by collecting more in premiums than what they are paying out in life insurance benefits. Of course, they have to do that; the reserves they accumulate are what enable them to cover life insurance claims. Unfortunately, this sometimes results in beneficiaries being denied a life insurance claim to which they may be legally entitled. Life insurance companies employ large staffs of attorneys and claims examiners whose mandate is to find ways to deny life insurance claims they can plausibly deny.
However, the life insurance company’s claim denial is not necessarily the final verdict. Any wrongful life insurance claims denial can be legally contested, opening up the possibility that you can recover the funds that are rightfully owed to you, together with back interest, other consequential damages and punitive damages in appropriate cases.
Am I a Victim of a Bad Faith Life Insurance Claim Denial?
While there are situations in which the denial of a life insurance claim is valid, sometimes the claim is denied mistakenly, or in bad faith. Many of the most frequent bad faith claims denials occur under the following scenarios:
- Death occurred in the contestability period: During the life insurance contestability period, usually the first two years of the policy, the insurance company has a lot more legal leeway to deny a claim; after this period, contracts are incontestable. Given that life insurance companies often have to pay out more in benefits than they have collected in premiums, it is no surprise that they make every effort to find a reason to deny benefits in these cases. Keep in mind:
- Anything that has been said on the policy application will be scrutinized, and possibly used as a reason to rescind the contract: age, weight, employment history…anything. The insurance company will be able to access medical and other legal records, and will examine these closely.
- If you are filing a claim where they deceased died within the first two years of issue or reinstatement of a policy, it pays to consult an attorney before you file the claim and certainly before you start answering any questions or consent to any access to records.
- Alleged material misrepresentation: Mistakes, errors or omissions on your initial application for life insurance coverage can leave you vulnerable to an eventual denial of your life insurance claim. If, during the application process, the insurance agent led you to complete your application erroneously, either accidentally or by design, you may be able to recover the benefits owed to you. Considerations to keep in mind are:
- What was the question/statementthat resulted in the claims denial? Was it ambiguous? Was it reasonably susceptible of being read by the insured in the manner he or she did?
- Was the statement a “material misrepresentation”, as not all misstatements are material.The usual test for this is: if the question had been answered correctly, would that have caused the insurer to deny issuance or charge more premium for the policy?
- Did the agent contribute to the misstatement, or say something that may have impacted your answer.
- Death during the application period: Some life insurance companies provide temporary life insurance to cover the gap between the completion of the policy application and the finalization of the policy. If a death occurs during this period, although you may legally be covered, the insurance company will likely scrutinize every aspect of your policy in painstaking detail, in an attempt to reject the claim. A typical reason for denial in this instance is a claim of material misstatement on the application or non-payment of the initial premium.
- Denial of accidental death benefits: Denial of accidental death benefits (the double or triple indemnity portion) of a policy are common, especially on policies more than two years old. In these cases, the company pays the face value of the policy, but denies the extra benefit for accidental death. Questions to ask yourself:
- Was it an accident as defined withinthe policy, or as commonly understood?
- Claim denied due to a lapse in payment:A claim can be denied if there was a lapse in payment of the premium. Questions to consider are:
- Was the notice of the lapse sent on a timely basis to the proper address? Was your payment sent? Was there a processing error? Was the payment made to agent who did not transmit it to company?
- Did the company have a pattern of accepting late payments? Do they have a grace period? Was there any disability waiver of premium provision that may excuse payment?
- Reduced settlements: Some unscrupulous life insurance companies try to settle an incontestable policy for a lesser amount,claiming some possible irregularity in the application, taking advantage of the beneficiary’s grief and confusion. If you have been offered less than the contracted amount of your policy, you should have an experienced life insurance lawyer help you investigate all of your legal options.
If any of this sounds familiar to you, you may be a victim of a bad faith claim denial, and may have legal recourse to obtain the funds that are rightfully yours.
Having an experienced team of life insurance attorneys on your side will enable you to protect your rights, bolster your case, and even the odds against the insurance company’s lawyers. That is where Advocate Law Group can help.
If you or a family member has had a life insurance claim denied or reduced, you want Advocate Law Group on your side.