Category: Life Insurance Claims
downtown at night

Is It OK to Have Multiple Life Insurance Policies?

Can you have too many insurance policies?

There is no law against having multiple insurance policies, life insurance or otherwise. The downsides to having multiple policies have to do with additional costs and hassle of keeping up with multiple policy payments.

Why should you have more than one policy?

  • To account for your loss of income when you pass away and to provide financial protection to your family
  • To cover debt or loans, such as a mortgage or car note’
  • To provide financial security to a business partner and enable your business to continue uninterrupted after you die
  • To cover potential inheritance tax liability against your estate.

Spread the Risk

Additionally, since different policies have different premiums and some insurance companies will deny claims for certain reasons that others would not, having multiple claims would spread the risk of any one claim being denied.

Economically, it could make sense to buy a cheaper policy that has many exclusions, a more expensive but expansive policy, and have the policies differ in years of coverage.

This way, the cost is more distributed and policies are in effect for different situations.

Disclose Secondary Policies

There are, however, steps that need to be taken to make sure that multiple policies pay out in the ways that you intend. The companies you purchase the policies from must each know that you have additional other policies.

Disclosure of your other policies might be on the applications themselves or, if there is not a question that addresses this, you should take steps to find out how the company handles the existence of other policies.

The existence of other policies affects the value of the policy, since there is a limit on value based on age and income, or what other sources of income could be funding a family’s financial obligations after death.

If the other policies are not disclosed, claims could be denied based on material misrepresentation or other reasons.

How to apply for multiple policies?

There are ways to make applying for multiple policies easier.

There are agencies you can hire which will represent insurance companies. This way you can just use one medical exam and packet of records, and avoid spending a ton of time doing repetitive submissions.

However, it is still important to do independent research on each of the policies to ensure that all the information that the agency provides to you is accurate, and that you have taken advantage of all the additional riders that may come with certain policies.

What happens to insurance policies after divorce?

If you are married and intend to plan for situations in which a separation might occur, be sure to consider how the multiple policies and benefits will be divided. In the case of Hall v. Hall, the wife of an insured person who held multiple policies had a divorce decree which split the cash value of the life insurance policies. One of the issues in this case had to do with whether the policies only included the ex-husband and wife’s policies, or the policies of the whole family.


Life Insurance Retained Asset Accounts Explained

Life Insurance Retained Asset Accounts Explained

Retained Asset Accounts, also known as RAAs, are tools created by life insurance companies as an alternative to paying out a lump sum.  You can think of an RAA as a pseudo bank account: the proceeds that would have normally been paid out are deposited in the insurance company’s corporate account, and you can access their funds via writing a check.

The Dangers of RAAs

Many policyholders have experienced difficulties with RAAs.  When they attempted to draft money from their account, they suffered significant delays.  

An RAA is not like a traditional bank account because the account actually belongs to the insurance company.  They are earning interest from your insurance proceeds that are deposited in their corporate account.

What Your Insurance Company Gains From RAAs

Some insurance companies make the RAA option seem more attractive by offering the policy holder a percentage of the interest that they earn.  While this is indeed an attractive benefit, there is significant concern surrounding which vendors do not accept RAA checks, as well as the general safety of the money that is deposited.  

Traditional banks are insured by the Federal Deposit Insurance Corporation, or FDIC. Your bank account is insured up to $250,000.

RAAs, on the other hand, are not insured by the FDIC. If the insurance company issuing the policy is not in good financial health and do not have the funds to distribute later on, there is no entity to pay you the money you are owed.

Recent Developments on RAAs

In a recent case, Huffman, individually and on behalf of a class, v. The Prudential Insurance Company of America, 2017 WL 6055225 (E.D. Pa. 2017), the Eastern District of Pennsylvania decided that The Prudential Insurance Company of America violated ERISA, a body of federal law, by depositing life insurance proceeds into RAAs.  This means that Prudential, along with other insurance companies that operate in Pennsylvania, will no longer be able to use them as the default method of paying out benefits.

States Differ In Treatment of RAAs

Because the insurance industry is regulated on a state level, the treatment of RAAs after the Huffman case will still have variations.

For example, while Florida allows the use of RAAs though Fla. Stat. Ann. § 627.473[1], Indiana has no explicit statutes or regulations that allows or disallows for RAAs.  Florida’s statute reads as follows:

“Any life insurer shall have the power to hold under agreement the proceeds of any policy issued by it, upon such terms and restrictions as to revocation by the policyholder and control by the beneficiaries and with such exemptions from the claims of creditors of beneficiaries other than the policyholder as set forth in the policy or as agreed to in writing by the insurer and the policyholder. Upon maturity of a policy, in the event the policyholder has made no such agreement, the insurer shall have the power to hold the proceeds of the policy under an agreement with the beneficiaries. The insurer shall not be required to segregate the funds so held but may hold them as part of its general assets.”

It is likely that Huffman will influence more states to address the validity and legality of various aspects of RAAs.

person writing their will

Financial ramifications of a loved one’s death

Coping with the death of a loved one can be an emotionally taxing experience. While finances may be the last thing on your mind, understanding the basics of estates, trusts, and life insurance can help to navigate these complex processes when the time comes.


A deceased individual’s estate is the sum total of his or her assets, i.e. all the property that he or she owned at death. This can take the form of real estate, bank accounts, automobiles, stocks, insurance policies, or virtually anything else of financial value.

Estates are distributed through a process called probate. Probate frequently involves the use of the deceased’s will. The executor, often a trusted friend or family member of the deceased, oversees the distribution process according to the terms of the will. The executor acts as a sort of middleman in between the deceased person and the  beneficiaries, often spouses, children, or relatives of the deceased, who are each entitled to a portion of the estate.

In the case of high-value estates, probate may become a heavily litigated process, with multiple parties claiming to be entitled to the same assets. It’s also important to note that the probate court process varies on a state-by-state basis. For instance, many states allow people with few or no assets to avoid probate (see Cal Prob Code § 13100).


A trust is an independent financial entity created when an individual (the “grantor”) puts money or assets aside to be managed, invested, and distributed by a trustee. Trusts may assign an individual or an asset management company (AMC) as trustee, and they may afford varying levels of discretion to the trustee. Some trusts specify that the trustee can distribute funds “as needed,” while others specify restricted uses or amounts at specific time intervals (see the “Spendthrift trusts” section of our previous blog post).

Because trusts are not technically “owned” by anyone, they are not counted as part of the grantor’s estate. In high-value estates (only those with values over $11.18 million as of recent tax changes), placing assets into a trust can help to minimize federal estate taxes (see our previous blog post). Trusts are also typically distributed at the discretion of the trustee, avoiding the probate process altogether.

Life insurance

In most cases, life insurance is not treated as part of the deceased’s estate or as a form of trust, but as a separate fund altogether (see our previous blog posts on probate and trusts for exceptions). With life insurance policies, the beneficiary must file a claim with the insurance company before being paid the death benefit. This typically involves 3 steps (see our previous blog post):

  • Step 1: Gather all relevant information about the policy by looking through the deceased’s records, bank statements, taxes, etc.
  • Step 2: Contact the insurance company and let them know of the insured’s death
  • Step 3: Fill out claim forms and send a certified copy of the insured’s death certificate

After completing these steps, you should be paid within 2 months. However, life insurance companies will frequently delay or deny legitimate claims in order to maximize their own profits. If you believe your claim has been unlawfully delayed or denied, don’t hesitate to contact an experienced life insurance lawyer.

Life insurance lawyers

What is a life insurance trust?

A trust is a financial entity created when an individual puts money or assets aside to be managed, invested, and distributed by a trustee. Trusts may assign an individual or an asset management company (AMC) as trustee, to which the terms of the trust may afford varying levels of discretion. Some trusts specify that the trustee can distribute funds “as needed,” while others specify restricted uses or amounts at specific time intervals (see the “Spendthrift trusts” section of our previous blog post).

Life insurance policies are typically “owned” by the policyholder, i.e. the person who applies for and pays premiums on the policy. Life insurance trusts are created when ownership of a policy is transferred from the policyholder to a trustee. Upon the insured’s death, the death benefit will be paid to the trustee and distributed to the beneficiary or beneficiaries by the trustee.

Why use a life insurance trust?

Although life insurance trusts do not typically offer advantages over personally-owned policies to the average consumer, there are a few situations in which creating a life insurance trust may be prudent.

Estate taxes

Although recent tax changes more than doubled the exemption threshold for federal estate taxes, estates worth over $11.18 million are still subject to a 40% tax rate. If the death benefit is transferred to the insured’s estate following his or her death (see our previous blog post), it may be subject to estate taxes. However, if the policy was owned by a trustee as part of a trust, it will escape taxation on the insured’s estate since it is not technically “owned” by the insured.

Control over distribution of death benefit

In a typical life insurance policy, the death benefit is transferred from the insurance company directly to the beneficiary or beneficiaries upon the insured’s death. However, life insurance trusts may afford full discretion over distribution of the death benefit to a family member or close friend as trustee, allowing them to control who gets what and when. This can be useful when children or financially irresponsible adults, who could not be trusted with the full death benefit, are named as beneficiaries to the trust. Additionally, since the trustee (rather than the beneficiary) controls the death benefit, it is protected from the beneficiary’s creditors.

hour glass

Life insurance policies: converting term life to whole life

Term life insurance policies are temporary and provide coverage for a specified period of time. Term life policies are simple: the policyholder pays regular premiums in exchange for a death benefit in the event of the insured’s death. There is no accumulated cash value, and premiums stay constant throughout the duration of the term.

If the expired term life policy included a conversion provision or rider, the policyholder can choose to convert the temporary term life policy into a whole life policy. In contrast to term life policies, which provide coverage up until the end of the term, whole life policies provide coverage for the entirety of the insured’s life or until a designated age such as 65, 75, or 100 years old. Whole life policies also accrue permanent cash value in addition to the death benefit. Since they are more valuable than term life policies, whole life policies often require substantially higher premiums.

Converting a term life policy to a whole life policy is often a simple process, and it can be beneficial on multiple levels. Conversion riders rarely require that the insured undergo a new medical exam or complete a new health questionnaire, which can be valuable if the insured developed a serious medical condition during the time that he or she was covered by the term life policy. Additionally, whole life policies specify future premium rates that are not subject to change. Even if the insured develops a terminal illness, he or she will still only need to pay the premiums listed on the policy.

However, conversion is not always the best option. Factors such as age, financial security, and health are all relevant and should be considered before converting to a whole life policy. For instance, if you are in good health and interested in taking out whole life insurance, it might be best to apply for a new policy altogether. Elderly individuals who only need to secure coverage for the next five or ten years may find that term life better meets their needs. Still, if you are happy with your current term life insurance and wish to make it permanent, conversion can be a worthwhile option.

multiple directions graphic

Can you have two primary beneficiaries on a life insurance policy?

Yes. An insured should always name multiple beneficiaries on a life insurance policy.

Why do you need more than one beneficiary on your life insurance policy? Read on to find out, and if you are a beneficiary to a life insurance policy that has multiple beneficiaries, this is what you need to know about the amount of death benefit you will receive.

If you have questions about being a beneficiary when there is more than one beneficiary on a life insurance policy, call us. Our award-winning life insurance beneficiary lawyers are ready to help you get paid.

What is a Beneficiary in Life Insurance?

A beneficiary is someone who is named to receive the death benefit on a life insurance policy. Upon purchasing a life insurance policy, the insured names one or more beneficiaries who will receive the death benefit if the insured passes away while covered by the policy.

How Many Beneficiaries Can Be on a Life Insurance Policy?

There is no limit to the number of beneficiaries an insured can name on a life insurance policy. An insured has multiple options for choosing beneficiaries:

  • Primary beneficiary
  • Secondary or Contingent beneficiary
  • Co-beneficiary

What is the meaning of primary beneficiary?

The “primary beneficiary” on a life insurance policy is the first in line to receive the death benefit. Even if contingent or secondary beneficiaries are named, the primary beneficiary receives the entire death benefit if they are available to do so.

What is a contingent beneficiary designation?

A “contingent beneficiary,” also called “secondary beneficiary,” may receive the death benefit in place of the primary beneficiary if the primary beneficiary is deceased or unreachable. Listing a contingent or secondary beneficiary acts as a safeguard in case something happens to the primary beneficiary.

What is a primary and secondary beneficiary on life insurance?

The primary beneficiary is first in line to receive the death benefit. If the primary beneficiary is not available, for example, if they cannot be found or they are deceased, the secondary or contingent beneficiary is next in line to receive the death benefit.

What happens when there are two beneficiaries on a life insurance policy?

How do you split life insurance beneficiaries?

When there are multiple beneficiaries on life insurance, the life insurance company first looks to the type of beneficiary designation the insured used. A primary beneficiary is the first to receive the death benefit. If the primary beneficiary is not available for any reason, the secondary or contingent beneficiary received the death benefit.

Can You Have Two Primary Beneficiaries on Life Insurance?

Yes. If there is more than one primary beneficiary, the primary beneficiaries share the death benefit equally or in a percentage determined by the insured at the time of designation. Multiple primary beneficiaries to life insurance are also called “co-beneficiaries.”

Who You Should Never Name as Your Beneficiary to Life Insurance

Certain people should not be named directly as your beneficiary, namely, minor children and disabled people. If you want to designate a minor child or disabled person as your beneficiary, create a trust in their name and name the trust as beneficiary. This way, you avoid the involvement of the court in naming a guardian for your intended beneficiary.

You should also not name your estate as your beneficiary because then the death benefit will be subject to the claims of your creditors and may be taxable as inheritance.

Be aware also that divorce affects the life insurance beneficiary designation, depending upon where you live.

Last, avoid being general about naming beneficiaries. For example, if you designate “all of my children” as beneficiaries, who do you mean if you have children by your first marriage, step-children in your second marriage, and a natural child outside of marriage? You are potentially laying the ground for a child contesting the life insurance beneficiary on your policy if you do not designate your children by name.

Can you have multiple beneficiaries on life insurance? Can there be more than one primary beneficiary?

Yes, and it is recommended that an insured names multiple beneficiaries to ensure that someone is available to receive the death benefit.

What happens if no beneficiary is named on life insurance policy?

If the insured does not name more than one beneficiary, there is no beneficiary, and this is what happens to death benefits when a life insurance beneficiary is deceased.

Lawyer to Help with Life Insurance Beneficiary Disputes and Life Insurance Claims

Legal problems frequently arise when multiple parties claim to be the validly named beneficiary to a life insurance policy, or when the beneficiary designation is sufficiently vague to be interpreted to designate different individuals as beneficiaries.

Were you named as a beneficiary to a life insurance policy, and there are multiple beneficiaries disputing your claim? Do you think you should be a life insurance beneficiary, but the beneficiary designation is vague and being interpreted too narrowly? Was there a last-minute beneficiary change, and you want to dispute that beneficiary’s claim? Was your life insurance claim denied? Is your life insurance claim delayed?

Our life insurance beneficiary attorneys can help. Contact us for your free, no-obligation case evaluation.

Filing out life insurance policy

Bad faith in life insurance policies

An insurance company acts in “bad faith” when it attempts to avoid its legal obligations to clients. Insurance companies engage in bad faith when they deliberately misconstrue or fail to disclose details of exclusions, fail to investigate or respond to claims in a timely manner, or unreasonably deny claims.

When a life insurance claim is denied, life insurance attorneys often argue that the company acted in bad faith.  If a beneficiary can prove that his or her claim was denied unreasonably, juries may award punitive damages in addition to the face value of the insurance policy in question.

States each define bad faith differently and provide slightly different legal causes of action. The vast majority of states allow for claims of first-party bad faith, but state law is divided on whether to allow for third-party bad faith claims. Within the context of insurance policies, claims of first-party bad faith are brought against an insurance company by a party included in the insurance contract (e.g. a beneficiary, a policyholder, or the insured). When beneficiaries have been unlawfully denied the death benefit from a life insurance policy, they may sue the insurance company on grounds of first-party bad faith.

Third-party bad faith generally does not apply to life insurance policies since third-party claims are filed by a party absent from the insurance contract, (i.e. not a beneficiary, a policyholder, or the insured). However, claims of third-party bad faith are common with other types of insurance such as car insurance, homeowners’ insurance, and liability insurance. For instance, injured parties in automobile accidents will often sue the insurance company of the driver who caused the accident under allegations of third-party bad faith.

Life insurance policies are typically written in very broad and general terms. While many of these terms are defined in the policy, some important terms are not. Every insurer owes a duty of good faith to those it insures. The obligation of good faith includes an obligation to interpret undefined terms reasonably.  This also means that insurance companies have an obligation to their policyholders to maximize the benefits a policy provides, and that they may not injure the other party’s ability to obtain the benefits they are entitled to. If you believe that your loved one’s insurance company has acted in bad faith by unlawfully delaying or denying your claim, don’t hesitate to have an experienced life insurance lawyer evaluate your case.

cash and checkbook

How do life insurance payouts work?

If you’re the beneficiary of a life insurance policy on someone who recently passed away, you may be wondering how the payout process works. What’s the typical time frame? What’s the usual procedure for processing claims? What do you need to do?

Step 1: Gather information

The first step in claiming your loved one’s death benefit is to look through their records for information on the policy. It’s helpful to have a complete copy of the policy when filing your claim, but this is not entirely necessary. Bank statements, updates from the insurance company via mail, and tax documents can all help you gather information about the policy. Employers may also have documentation on any group life insurance policies that were purchased as part of an employee benefit plan. If nothing else, you should at least know which insurance company to contact.

If you’re not sure whether your loved one had life insurance to begin with, there are several options available (see our previous blog post). For instance, the National Association of Insurance Commissioners (NAIC) runs a “Policy Locator Service” in which the NAIC will contact insurance companies on your behalf. You can also pay private companies such as Policy Inspector to speak directly with insurers and search for a missing policy.

Step 2: Contact the life insurance company

The next step is to contact the insurance company directly and let them know that the insured has passed away. In order to locate the policy, they will need the insured’s date of birth and social security number, and/or the policy number. They will then send you claim forms and tell you which documents they need to have before processing your claim. If the policy is through an employer, contact the employer’s human resources or benefits department with the information instead of contacting the insurer.

Step 3: Fill out claim forms

The sooner you fill out the claim forms, the sooner the insurance company can process the claim. If you need the death benefit as soon as possible, you’ll want to fill out claim forms shortly after receiving them. Each insurance company has its own process for claimants, but you will always be required to send a copy of the insured’s death certificate. Insurance companies typically accept claim forms by mail or through an agent, but some also allow claims to be filed online.

Step 4: Wait for a response

Each state has its own rules for when life insurance companies need to pay their claimants. For instance, SC Code § 38-63-80 dictates that if an insurer hasn’t processed a claim within 30 days of submission of claim forms, the insurer will also have to pay interest on the death benefit. Although it doesn’t provide a strict deadline, this statute incentivizes insurance companies to pay within the initial 30-day period. Generally speaking, your claim should be processed and your benefit paid within 1-2 months after submitting claim forms. Some companies say it takes as little as 10-14 days for the average, uncontestable claim.

If your claim is approved, the insurance company will typically provide multiple options for payment. You may elect to receive the benefits all at once in a lump sum payment, or to distribute them out over time through annuities. Using an annuity system can allow the policy to collect interest, but this interest is generally taxable. A notable exception occurs on policies with spendthrift provisions, in which the insurer holds onto the benefit and distributes it via prespecified installments (see our previous blog post).

However, life insurance companies may attempt to find reasons to delay or deny your claim (see our previous blog post). This is especially common when the policy was purchased within the past 2 years. During this period, errors, misrepresentations, or omissions can void the life insurance policy altogether, and suicide is generally not covered. Within this period, insurers will frequently delay claims in order to conduct a thorough investigation of the insured’s medical records. Even outside of this two-year window, life insurance companies may deny your claim due to nonpayment of premiums (see our previous blog post) or for violations of arbitrary, overly specific provisions on the policy. If your claim has been unjustly delayed or denied, it’s prudent to contact an experienced life insurance lawyer for a free consultation.

If you or someone you know is struggling with thoughts of suicide, call the National Suicide Prevention Hotline at 1-800-273-8255 to access their national network of local crisis centers that provide free and confidential emotional support to people in suicidal crisis or emotional distress 24 hours a day, 7 days a week.

denied graphic

Life Insurance Not Paying Out? These Are The Most Common Reasons.

You may find yourself in a situation with your life insurance not paying out. A life insurance company can refuse to pay a claim for many reasons. What are the reasons life insurance claims are denied?

Just because your claim was initially denied does not mean that you do not have options. You can fight an insurance company when your life insurance is not paying out. Call us at 855-865-4335 to discuss the specifics of your life insurance policy and learn about your options.

Life insurance policies are supposed to protect families and dependents in the unfortunate event of a loved one’s death. Life insurance policies are valid, legally binding contracts between policyholders and insurance companies. So, how is it that your life insurance is not paying out?

Remember, life insurance companies only make money for their shareholders when they don’t pay claims. Here are the most common reasons life insurance won’t pay out.

There was a Suicide Exclusion in the Life Insurance Policy

If your life insurance policy has a suicide exclusion, the beneficiaries will not receive the death benefits if the insured died by committing suicide. Suicide clauses often differ depending on what state’s law applies to the policy.

These exclusions commonly state something along the lines of, “if you commit suicide within the first two years of this contract, the beneficiaries will receive a premium refund, but not the death benefit.”

One common complication with enforcing suicide exclusions is proving that the insured actually committed suicide. It is not uncommon for an insured to die accidentally, resulting in what might look like a suicide.

One case in which we got our beneficiary client paid arose when the insured died due to autoerotic asphyxiation. The autopsy stated that the cause of death was accidental, as the insured had laid out clothing for the next morning. The insurance company had the burden of proving that the insured “purposefully injured himself” (an exclusion) and could not as there was evidence the insured intended to survive.

Keep in mind that although we were successful in this case and many others, we cannot guarantee the result of any other matter. But we can guarantee that at the Boonswang Law Firm, our attorneys have extensive experience in taking on the challenge of disputing these suicide exclusions. As a result of our skill and knowledge in insurance law, we have been able to successfully obtain death benefits for clients who had previously been denied payment in the face of suicide exclusions.

If you or someone you know is struggling with thoughts of suicide, call the National Suicide Prevention Hotline at 1-800-273-8255 to access their national network of local crisis centers that provide free and confidential emotional support to people in suicidal crisis or emotional distress 24 hours a day, 7 days a week.

Life Insurance Claim Denied Due to a Drug Exclusion

Many policies also have exclusions that will prevent a beneficiary from receiving the death benefit if the insured died due to illegal drug use and/or even prescription drug use.

Insurance companies often apply this exclusion in situations where marijuana or some other drug was found in the insured’s toxicology report. Insurance companies also will apply the exclusion in cases involving heroin overdoses or when someone took too many prescription pain pills or other medication.

Does life insurance cover drug overdoses? Sometimes. Some states have laws that protect life insurance policyholders who are prescribed narcotics or who are deemed disabled due to addiction.

One recent case in which we successfully got our client beneficiary paid arose when the insured died in a motorcycle accident. The toxicology report stated that the insured had “acute amphetamine intoxication” so our client’s death benefit claim was initially denied.  However, ultimately it was determined that the insured died of injuries sustained in the motorcycle accident some several weeks later, not from a drug overdose the day of the accident.

Of course, we cannot guarantee the result of any matter. However, our attorneys at The Boonswang Law Firm are extremely knowledgeable in life insurance laws across the country and the nuances one must argue when faced with claim denial due to policy exclusions. Our knowledge and experience help us zealously fight for our clients and get them the death benefits they deserve.

If you or someone you know is abusing drugs or suffers from drug addiction, call the Substance Abuse and Mental Health Services Administration (SAMHSA) hotline at 1-800-662-HELP (4357) for free and confidential help, 24 hours a day.

Life Insurance Claim Denied Because the Insured Died During an Illegal Act

This might seem like common sense, but there are plenty of times people do illegal things and don’t realize it. For example, what if you were jogging and unintentionally trespassed on private property? If you had a heart attack and died while jogging, the insurance company will try to deny your beneficiary’s claim because you were doing something illegal when you died.

Life Insurance Claim Denied Due to an Act of War

Most policies have an Act of War exclusion to deny the claims connected to civilians killed in wars. This will commonly apply to first aid and other medical volunteers in an area of conflict, journalists, and others who travel to regions of the world where there is armed conflict.

Claim Denied Because the Insured’s Death Was Due to Another Exclusion

Every policy has a set of exclusions, and they differ from insurer to insurer. If there is any chance the insured’s death was excluded from coverage, the insurance company will leap at the chance of denying a beneficiary’s claim.

This is especially the case in AD&D policies, in which companies will define “accidental” death in a manner that is deliberately hard to satisfy. Common provisions are that the insured must die within 90 days of the injury which caused his or her death and that death in an airplane is not covered if you are a pilot.

Recently we settled a case where the insured died of drowning, but he drowned due to an undiagnosed heart condition. We argued that “accident” is an event that is not a natural and probable result of the insured’s own acts. In this case, there was no way the drowning could have been naturally and probably expected or anticipated by the insured because it was caused by his undiagnosed heart condition. Our client got paid.

Life insurance will often not pay out to beneficiaries’ and try to apply exclusions even when they are legally required to pay out. An insured should disclose participating in any activities that are considered dangerous by the insurance company. This might include skydiving, motorcycle riding, mountain climbing, kayaking, surfing, or anything that could be subject to exclusion under some policies. This way, an insured can get the type of policy that is right for them and their lifestyle.

Claim Denied Due to Misrepresentation On Application

Death benefit claims are frequently denied due to alleged fraud on the part of the insured. If the insured did not disclose a past or present health condition, medications, or past surgeries, did not disclose past or present lifestyle habits such as alcohol or drug use, or did not disclose participation in activities that the insurance company deems dangerous, the insurance company is sure to deny a claim for death benefits if the insured died due to any of these.

If you or someone you know is struggling with alcohol or drug abuse call the Substance Abuse and Mental Health Services Administration (SAMHSA) hotline at 1-800-662-HELP (4357) for free and confidential help, 24 hours a day.

If the insured died during the two-year contestability period, but not of anything he or she failed to disclose on the initial application, the insurance company will still deny the claim. We have gotten our client beneficiaries paid under these circumstances.

The most common allegations of misrepresentation include:

  • Medical History
  • History of Tobacco or Drug Use
  • Financial Background
  • Criminal Background (Arrests or Convictions for Serious Offenses)

Agent Negligence Causing an Error or Omission on the Application

We have gotten many client beneficiaries paid when their claim was denied because the insurance agent made a mistake completing the insured’s initial application for insurance. The life insurance company will deny beneficiaries’ claims due to alleged fraud, when the mistake was in fact the agent’s.

Claim Denied Due to Nonpayment of Premiums

When the life insurance premiums are not paid, the policy will lapse and terminate. However, we have gotten many beneficiaries paid under these circumstances because the fault is frequently not the insured’s.

When you buy a life insurance policy, the insurance company’s obligation to pay out is contingent on the policyholder having paid the premiums. Life insurance may not pay out due to nonpayment of premiums.

If you forget to pay, the insurance company will typically provide a “grace period” for making late payments of around one month from the due date. If you do not pay within the grace period, the policy will “lapse,” and you will no longer be covered. Even if you’ve been paying diligently for decades, your policy can be terminated after missing one premium payment.

Lapse in coverage because employee stops working and employer stops paying premiums

Sometimes policy lapse and termination happen through no fault of the insured. For example, if ERISA controls, there are many safeguards in place for an insured who does not receive the required notices and application for conversion from their employer, and their employer simply stops paying premiums on their behalf. Beneficiaries can get paid even if the policy lapsed in these circumstances!

Lapse in coverage because the employee went on disability and the coverage ended

Again, there are notices that the employer is required to provide an employee if the employee is out of work on disability. The employer may not simply stop paying premiums.

Death Due to Extreme or Dangerous Activities

So-called “Accidental Death & Dismemberment” policies (AD&D) are commonly sold under the impression that if the insured dies of a non-natural, “accidental” cause, a death benefit will be paid to his or her beneficiaries. However, it is common for accidental death insurance claims to be denied.

Insurance companies often define “accident” in an arbitrarily specific manner, in which long lists of provisions must be satisfied before they agree to pay out. For this reason, companies will frequently base their denial on evidence surrounding the circumstances of the insured’s death. It should be noted that AD&D policies never cover suicide or health-related deaths, since both of these scenarios would not qualify as an “accident.”

We recently settled a matter where the insured died from severe injuries he sustained in a motorcycle accident, several weeks after the accident. Our client’s claim was initially denied based on “acute amphetamine intoxication” and benzodiazipine use, although no medical history was available, no autopsy was ever performed, and the medical examiner never viewed the body.

We argued that the insured’s cause of death was the injuries sustained from the accident, having nothing to do with drug use, that forseeability of the accident is legally irrelevant, and that even deaths resulting from negligence (taking drugs then driving) may still be an accident. We got our client paid!

Death During First 2 Years of Life Insurance Policy

In most states, the first two years of a life insurance policy are considered the “contestability period,” i.e., the period of time during which an insurance company can review and fact-check information on a life insurance application (see our previous blog post about what happens when someone dies shortly after getting life insurance).

If the insured dies during the contestability period, the company will do a full investigation of the individual’s medical records as well as any other information requested on the application.

This means that if there were any misrepresentations, falsities, or omissions on the application, the insurance company may retroactively cancel the policy and refund premiums instead of paying the life insurance claim. This is an extremely common tactic among insurance companies, even when the misrepresentation in question is unrelated to the insured’s death. All too frequently, life insurance claims are denied due to a mistake on the application.

For example, we got our beneficiary client paid in full when the insured died within the contestability period of heart failure.  We argued that the insured had no history of heart failure and therefore could not disclose that.

You should also know that most life insurance policies contain a two-year “suicide clause,” in which claims can be denied in the event of a policyholder’s suicide.

This is meant to deter people from buying policies with the intention of committing suicide shortly afterward, thereby leaving large life insurance benefits for their family members. However, suicide is not always clear-cut, and life insurance may not pay out when there exists a mere possibility of suicide.

An insured should always disclose any past or present health conditions, surgeries, and medications, as well as lifestyle habits such as previous or current smoking, drug use, or alcohol use.

Claim Denied Because the Insured Died Abroad

A policy may specify that if you die while living outside the United States, that is an exclusion that results in claim denial. Be sure to inspect your policy for this exclusion if you plan to live abroad.

If you die while traveling abroad, the insurance company may delay paying on your beneficiary’s claim while they investigate.

Claim Delayed or Denied Due to a Problem with the Beneficiary

Insurance companies invariably deny claims when there are one or more of the following problems with the beneficiary:

  • Beneficiary dispute
  • There is no beneficiary designation on file.
  • The beneficiary was changed after a divorce.
  • The beneficiary of the policy is a minor.
  • The insured did not name a spouse as a beneficiary in a community-property state.
  • The life insurance policy was included in a will or willed to an estate.
  • The beneficiary was not updated after a significant life change.
  • The beneficiary is not a specific person, such as “children” or “relatives.”
  • The insured named only a primary beneficiary and no secondary beneficiary

Claim Delayed or Denied Because the Death was a Homicide

In most cases, life insurance policies should pay out in the event of homicide. However, there are specific circumstances in which insurance companies could deny a beneficiary’s claim in the event of the insured’s murder.

For instance, if the beneficiary is under investigation for the homicide of the insured, then the beneficiary will not receive the death benefit until cleared of any involvement in the insured’s death. Additionally, life insurance companies will rarely pay out if the insured was murdered while participating in unlawful/criminal activity.

We had one case where the insured was murdered. The insured was a drug user, and the beneficiary’s claim was denied based on misrepresentation. We successfully argued that the agent did not probe into the insured’s drug use, that the insured was never asked whether he was treated for drug abuse, and that drug abuse had nothing to do with the cause of death. Our client was paid in full.

If Your Claim For Death Benefits was Denied, Do Not Take No for an Answer!

If you believe your life insurance or AD&D claim has been unlawfully delayed or denied, don’t hesitate to contact an experienced life insurance beneficiary lawyer for a free case evaluation. We get our clients paid!

Fake graphic

Misrepresentations and cause of death in life insurance applications

Can Life Insurance Companies Deny a Claim?

At first glance, life insurance seems like a fairly simple process. The policyholder applies for insurance with a specified death benefit, and, after he or she dies, the beneficiary or beneficiaries will receive this benefit in full. However, this is not always the case.

Insurance companies will frequently deny benefits to claimants due to misrepresentations during the policy’s contestability period.

The Laws Governing Insurance Vary From State to State

Each state has unique laws limiting the insurance company’s ability to rely on misrepresentations on the application to avoid liability. Typical statutes require some combination of three main elements: intent, materiality, and relation to the insured’s cause of death.

An Insurer Must Prove “Intent to Deceive”

Some states provide that an insurer cannot deny claims unless they prove that the misrepresentations were made with the “intent to deceive” the insurer. This means that the policyholder intentionally lied while filling out the application for life insurance.

For instance, Alabama Code §27-14-28 states that no “misrepresentation … under any insurance policy shall defeat or void the policy unless such misrepresentation is made with the actual intent to deceive as to a matter material to the insured’s rights under the policy.”

If an insurer voids an Alabama policy due to misrepresentations on the application, they must prove that these misrepresentations were knowingly and willfully made.

What is Material Misrepresentation on an Insurance Application?

Most states require that a misrepresentation be “material” in order to void a policy and deny a beneficiary’s life insurance claim. Within the context of life insurance, this means that the misrepresentation must have substantially affected the insurer’s decision to issue the policy in question. If the misrepresentation was “immaterial,” or did not affect the insurability of the insured, then the policy cannot be voided.

For instance, California Insurance Code § 359 allows insurers to “rescind the [insurance] contract” provided that “a representation is false in a material point.” The materiality of specific misrepresentations is hotly contested between denied claimants and insurance companies.

Misrepresentation Must be Relevant to Cause of Death

Five states (Kansas, Missouri, Nebraska, Rhode Island, and South Carolina) provide that misrepresentations cannot void a life insurance policy unless they “contribute” to the insurer’s “loss.”

For instance, Neb. Rev. Stat. § 44-358 dictates that the “breach of a warranty or condition in any contract or policy of insurance shall not avoid the policy nor avail the insurer to avoid liability, unless such breach shall exist at the time of the loss and contribute to the loss.” This means that a connection must exist between the misrepresentations in question and the insured’s cause of death (which leads to the insurer’s “loss”).

For instance, if the insured neglected to mention a diagnosis of diabetes when applying for life insurance but died in an automobile accident, the insurer could not legally void his policy due to the misrepresentation of diabetes.

Insurance companies will frequently deny claims based on misrepresentations that were not material to their risk, made without the intent to deceive, or irrelevant to the insured’s cause of death. For example, our client’s claim was denied when the insured died of COPD. We showed that the insured was never diagnosed with COPD, therefore there was no intent to decieve. WE got out client paid. Another client’s claim was denied due to “incorrectly answered questions” on the application. The insured died of natural causes, therefore, there was not only no intent to deceive but the insurer could not show that any errors on the application were material to their risk. Again, we got our client paid.

If the Misrepresentation Was Made By The Insurance Agent, the Beneficiary Can Get Paid

We have seen many, many cases where the application was filled out incorrectly by the insurance agent, despite the insured giving the agent correct information, and the claim was denied.  As a general rule, anything the agent knows is imputed to the insurance company, so the insurance company cannot deny a claim based on misrepresentation under these facts.

If your claim has been unjustly denied or delayed due to alleged misrepresentation, don’t hesitate to ask an experienced life insurance lawyer to evaluate your case.

Call Us Now
Email Us Now