Category: Life Insurance

Power of Attorney & Life Insurance Claims Explained

Power of attorney for insurance purposes can mean any of several different things. Renowned national life insurance attorney Chad G. Boonswang explains everything you need to know about power of attorney in life insurance.

If you are having trouble getting your payout due to a power of attorney, or your life insurance claim was denied due to a power of attorney, call the experienced life insurance lawyers at Boonswang Law for help. We have helped beneficiaries nationwide get the payout they are due. Put our experience to work for you.

What Power of Attorney Is

“Power of attorney” is the term used for an estate-planning document granting authority to someone to make legal, financial, or medical decisions on your behalf. The power of attorney may be temporary or permanent.

Power of Attorney Varies from State to State

As a legal document, state law governs a power of attorney and the law varies from state to state. If you seek to draft a power of attorney, be sure to consult with a wills and estate attorney for help in drafting a document that conforms to the law in your state and is binding.

How Power of Attorney Works with Life Insurance Claims

Depending upon the laws in your state, someone with power of attorney may have the authority to do a number of things for a life insurance policyholder, including:

  • Purchasing life insurance coverage
  • Paying life insurance premiums
  • Renewing life insurance coverage
  • Life insurance coverage conversion
  • Changing life insurance beneficiary designations
  • Creating a life insurance trust

A person with power of attorney has a fiduciary duty to act in good faith and in the best interests of the person granting power of attorney. Often, the person with power of attorney is also the life insurance beneficiary, as in the case of married couples.

The power of attorney ceases upon death:  therefore, a person with power of attorney of a policyholder who dies no longer has the authority to act for that policyholder. Whomever is named as the life insurance beneficiary receives the death benefit at that point.

Power of Attorney & Beneficiary Designations

Someone with power of attorney may have the authority to change beneficiary designations on behalf of the policyholder but he or she is disallowed from naming themselves a beneficiary. They must submit their power of attorney document to the life insurance company along with the beneficiary designation change form.

Someone with limited power of attorney may not have the power to change beneficiaries even if permitted to do so under state law. If they do have the authority to change beneficiary designations, they may do so up until the policyholder’s death, unless the policyholder designated an irrevocable beneficiary such as in divorce judgments regarding life insurance and spousal support court orders regarding life insurance.

Power of Attorney Rights

The rights of a person holding power of attorney varies state to state and according to the particular document the policyholder executes. 

General power of attorney usually grants someone the authority to make all decisions on behalf of someone else. Medical power of attorney grants the authority to make all medical decisions on behalf of the policyholder, but not other decisions such as financial decisions. Durable power of attorney grants someone the right to make decisions on behalf of another if they should become incapacitated. Limited power of attorney grants someone the authority to act on behalf of another in a specific instance.   

Someone with power of attorney can only change life insurance beneficiaries if permitted to do so under state law and by the power of attorney document the policyholder executed. 

A life insurance company should not delay payment or deny payment to a named beneficiary based on power of attorney documents alone, but this does often happen.

How a Life Insurance Lawyer Helps Navigate Power of Attorney

If your life insurance claim is delayed or denied based upon power of attorney, call us for help. We have seen claims denied due to improper beneficiary changes by the person with power of attorney. Also, life insurance representatives are not as familiar with the law regarding power of attorney as they should be, and they have paid out based upon power of attorney documents rather than the named beneficiary.

Don’t take no for an answer! If someone with power of attorney caused a delay in your life insurance claim or caused your life insurance claim denial, we can help you with your life insurance claim denial appeal or your beneficiary dispute interpleader action. If your life insurance claim was denied due to lapse because the power of attorney failed to pay premiums, you may have legal recourse against them. Call us today to discuss your claim, free of charge.

Life Insurance Companies & Your Medical Records

You would think that because you pay life insurance premiums, your beneficiaries will automatically get their payout if you die within the policy term. It is rarely that simple. 

Life insurance companies only make money when they collect premiums and don’t pay death benefits, so they look for ways to deny your beneficiaries’ claims. They may investigate your medical history to find out if you had any undisclosed illnesses, conditions, medications, or surgeries they can use to rescind your policy due to alleged misrepresentation. If the policy is rescinded, the life insurance company won’t pay.

Noted national life insurance lawyer Chad Boonswang explains how this happens and what to do about it in this comprehensive article. If your life insurance claim was denied due to misrepresentation, call the life insurance lawyers at Boonswang Law for help with your life insurance claim denial appeal. We have helped life insurance beneficiaries across the nation get the death benefits they deserve. Call us today to discuss your case.

Do Life Insurance Companies Check Medical Records Following a Policyholder’s Death?

The short answer is yes, they can. As part of most life insurance contracts, the policyholder agrees that their representative provides the life insurance company with medical records if requested. The clause may also state the circumstances under which the life insurance company will request medical records, such as:

Life insurance companies are supposed to check medical records before issuing a policy when a policyholder’s answers on the initial application and medical questionnaire indicate there may be further medical issues, or if the life insurance company needs more information about the policyholder’s health before underwriting a policy.  In reality, they rarely do so.

Do Life Insurance Companies Need Permission to Obtain Medical Records?

Yes. Under the Access to Medical Reports Act (1988) and the Data Protection Act (2018), the policyholder’s executor or other representative must provide the life insurance company with the policyholder’s medical records. The life insurance company cannot obtain medical records on their own without a representative’s consent.

That said, there are private services which provide life insurance companies with prescription histories and lab test results for a fee, without your permission. Also, life insurance companies can obtain anything in the public record, such as a DUI or a bankruptcy filing. 

Life insurance companies are motivated to collect all information possible to assess the risk a policyholder will die within the policy term and they charge premiums according to that risk. They may subscribe to a service such as the Medical Information Bureau (MIB) for this purpose.

Life insurance companies are also motivated to investigate a policyholder’s cause of death if the policyholder dies within the contestability period or of undisclosed illness, disease, lifestyle habit, or condition. Obtaining the policyholder’s medical records is part of that investigation.

How Many Years of Medical Records Can Life Insurance Companies Check?

When initially underwriting a life insurance policy, life insurance companies sometimes check up to 10 years of an applicant’s medical records. If a policyholder dies under suspicious circumstances, the life insurance company looks at the medical record they have and the record generated by the policyholder from the date that they applied for life insurance coverage to the date that they died.

Why Life Insurance Companies Want to Check Medical Records

Life insurance companies look at medical records to ascertain whether the policyholder died of an undisclosed injury, illness, disease, condition, or lifestyle habit. If the policyholder failed to disclose what eventually caused their death, the life insurance company denies their beneficiaries’ claims due to misrepresentation.

Life Insurance Companies Demanding Medical Records

Life insurance beneficiaries rarely have a choice – they must provide the life insurance companies with the medical records they demand to have their claim for death benefits processed and paid. 

If the life insurance company is asking for consent to view medical records, they are probably looking for something to give them cause to allege the policyholder lied on their application and  rescind the policy and deny your claim due to misrepresentation.

Life Insurance Company Asking for Health Care Providers of Policyholders

Most policyholders must provide life insurance companies with the name and contact information of their primary care physician as well as any medical provider they regularly see, or they’ve seen in recent years. This facilitates gathering medical information on the policyholder before issuing the policy as well as after death.

Talk with a Life Insurance Lawyer for Help

If your life insurance claim was denied due to misrepresentation and policy rescission, call us for help. We discuss your case with you free of charge.

Know that many claims which get denied due to misrepresentation are paid after we look into it and show the policyholder did disclose everything they knew or the policyholder made an innocent mistake. Don’t take no for an answer. Call us to get your life insurance claim paid.

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Vanishing Premium in Life Insurance Policies

What is a vanishing life insurance premium? Is it a good thing? Perhaps, for some people. Learn about vanishing life insurance premiums from noted life insurance lawyer Chad G. Boonswang, Esq. in this informative article.

If your claim was denied due to nonpayment of life insurance premiums or policy lapse, call the experienced life insurance lawyers at Boonswang Law. We have helped beneficiaries nationwide reverse their claim denial and get the payout their loved one intended. Your initial consultation is free of charge, and we take cases on a contingency basis only – meaning that we do not get paid unless and until you do. Contact us today.

Vanishing Premium Definition

Someone owning a permanent life insurance policy may elect to stop paying premiums once the policy accrues enough value to pay dividends or interest enough to cover the premium payment. In other words, the policyholder can elect to have their life insurance policy fund itself if they have a more lucrative place to put the money they otherwise would pay in premiums.

Whole life insurance and universal life insurance.are types of permanent life insurance. 

Term vs Whole Life Vanishing Premiums

Term life insurance is coverage purchased for a specified term, such as 15 or 25 years, during which the policyholder pays periodic premium payments to maintain that coverage. Once the term ends, coverage ends. The policy has no present cash value and only pays out if the policyholder dies within the policy term.

In contrast, whole life insurance does accrue value and stays in effect for the policyholder’s life as long as premiums are paid. Most whole life policies carry a minimum rate of growth, and may grow much more depending upon the performance of the life insurance company’s investment portfolio. If the policy grows in value to the point where either interest or dividends are enough to pay the premium payments, the policyholder can elect to do that.

Vanishing Premiums vs Flexible Premiums

Another type of permanent life insurance is adjustable life insurance, which has flexible premiums and other features. After purchasing coverage, the policyholder can elect to pay more or less in premiums. The policyholder can also alter the amount of the death benefit and the cash value (the portion of the account invested) of an adjustable policy, while a whole life policy having vanishing premiums carries a fixed death benefit.

Flexible premium life insurance comes at a cost – the premiums are much higher than term life insurance and can be higher than for a whole life policy with vanishing premiums. Although you can borrow against the cash value of an adjustable policy the interest on that loan may not be tax deductible. Withdrawing from the cash value of an adjustable policy is a taxable event.

Modern Drawbacks with Vanishing Premiums

Historically, life insurance companies have been overly optimistic regarding the expected performance of their investment portfolio. Some even fraudulently inflated expected returns to attract policyholders. This led potential policyholders to believe that the premium would vanish much sooner than it actually did, so they purchased the policy. The policyholders did not have the information they needed to accurately calculate the cost of the policy and compare it with the cost of a term life insurance policy of equal coverage.

Today life insurance companies are highly regulated. By law they must inform potential policyholders of the risks of purchasing a whole life policy and disclose past performance of their investments, among other things. 

One drawback of a vanishing premium in life insurance is that money is taken from the policy to pay the premium, reducing the amount the policyholder could otherwise realize from the investment. Another is the policyholder having unreasonable expectations regarding the growth of the value of the policy, and not planning to pay premiums out-of-pocket as long as they must.

Who Might Need a Vanishing Premium?

Policyholders concerned about long-term fluctuations in income, such as business owners, entrepreneurs, and self-employed/independent contractors, may need to take advantage of a vanishing premium at some point. 

What to Do If You or a Loved One Has a Vanishing Premium Policy

If you have a life insurance policy with a vanishing premium and that option is available, you must calculate the true cost of using funds from your policy to pay premiums and compare that with what the premium payment could be earning elsewhere. Only then can you determine whether allowing your permanent life insurance to pay for itself makes financial sense to you. 

Of course, if due to your financial situation at the time you do not have the funds on hand to pay the premium, then exercising the option to pay premiums from your policy saves your policy from lapse.

How a Life Insurance Lawyer Helps

Premiums must be paid, and if opting for a vanishing premium, that option must be exercised in writing. If this is not done and the premiums are not paid, the policy may lapse and terminate, and you will lose your paid premiums as well as the accrued cash value. Moreover, the life insurance company will deny your beneficiaries’ claims for your policy’s death benefits.

If your claim was denied due to nonpayment of premiums and policy lapse, call us. There are many reasons for life insurance lapse that are not the fault of the policyholder, and in those cases, we can get our clients paid. Speak to an experienced life insurance lawyer today about your case.

Life insurance policy

Forged Signature Life Insurance Policies: What You Can Do

While it is not impossible to forge someone’s signature on a life insurance policy, it is highly illegal and there are safeguards in place to catch such instances. 

This article will explain what forged signatures are, the circumstances under which you can legally take life insurance out on someone else, and what to do if the life insurance company is delaying payment or has denied your claim for death benefits due to an alleged forged signature.

If your claim was denied due to an alleged forged signature on a life insurance application or life insurance beneficiary designation change, call the experienced life insurance lawyers at Boonswang Law to discuss your case, free of charge.

Forged Signature Life Insurance Definition

A forged signature is one made by someone other than the presumptive signor but in their name, with an attempt to pass it off as theirs.

Purchasing a Life Insurance Policy on Someone by Forging Their Signature

Signing the insured’s name on an application for life insurance is insurance fraud and illegal. If you get away with it, which is unlikely, the policy will likely not pay out.

Changing Someone’s Life Insurance Beneficiary Designation by Forging Their Signature

Changing an insured’s beneficiary designation to yourself by forging their signature is also insurance fraud. This could subject you to fines and jail time, and you will have a beneficiary dispute to defend, which is costly.

Can You Get a Life Insurance Policy On Someone Else Without Them Knowing?

Simply put, insuring someone without their knowledge or consent is illegal. Insurance fraud is punishable with fines and imprisonment. If you try, chances are you will be caught.

Why You Shouldn’t Anyway

Aside from being illegal, it would be impractical to take out a life insurance policy with a forged signature because it probably won’t pay out in the end. 

Let’s say that you had all the necessary information on the person you wish to insure and were able to fill out the application and medical questionnaire. The life insurance company will likely flag that application for fraud for a number or reasons. 

First, most life insurance companies require that an applicant for life insurance submit to a medical exam. If they do not, they will require copies of the applicant’s medical records. It is very difficult to overcome that requirement if you are not the applicant themselves. 

Second, the life insurance company will also likely check to make sure the applicant lives where stated and works where stated. Either of these checks will alert either the life insurance company or the person you wish to insure of the fact that you are trying to take out a policy on them. 

Last, in the unlikely event you are able to overcome all these hurdles and you successfully take out life insurance on someone, the policy may not pay in the end. 

If the person you insured dies within the two-year contestability period, the life insurance company’s fraud department carefully inspects the application and medical questionnaire for errors and omissions. Should they find any, they will deny your claim. Even if they die after the contestability expires, you will need an original death certificate to file your claim for death benefits. How are you going to obtain that? 

When You Can Take a Life Insurance Policy Out On Someone Else

You can take out life insurance on someone if you have their consent and an “insurable interest” in them. What is an insurable interest in life insurance?

The exact definition of “insurable interest” varies state-to-state. That said, it is basically your interest in having the insured alive. You have an insurable interest in yourself and your immediate family members. if you rely on someone’s income for support, you have an insurable interest in them. You may have an insurable interest in the life of a friend who is taking care of your child, or a professional caretaker caring for your parents, or a business partner. You may also have an insurable interest in someone to whom you loaned money.

You must show the life insurance company that you have the consent of the insured and that you have an insurable interest in them. The insured will likely need to submit to a medical examination. Then, to get your application for life insurance on that person approved, you must satisfy any additional requests from the underwriting department.

Life Insurance Claim Denied Due to Suspected Forged Signature

A beneficiary’s claim for benefits will be denied or at least delayed if the life insurance company suspects that the insured’s signature has been forged. The life insurance company’s fraud department investigates and compares that signature with other known signatures of the insured. They may contact close friends and relatives to inquire about the signature. 

Proving a Signature Isn’t Forged

If your claim was denied because of an alleged forged signature on life insurance, you can fight back. Find other examples of the insured’s signature to show the life insurance company is one good way to do so.

How a Life Insurance Lawyer Helps

If your claim was denied due to an alleged forged signature, you have more problems than just not getting your payout. You can be criminally prosecuted if the life insurance company suspects you forged the insured’s signature. 

You need an experienced life insurance lawyer by your side to combat these allegations and show that the signature is genuine. Call today to discuss your case with us, free of charge. We take life insurance cases on contingency, which means we don’t get paid unless and until you do. Let us help you get paid and fight any allegation of life insurance fraud.

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Revocable vs Irrevocable Beneficiary

Life insurance policyholders are usually free to designate revocable beneficiaries and change beneficiaries anytime during the policy term, but there are some instances where a policyholder must designate an irrevocable beneficiary, which cannot be changed easily.

Find out the differences between revocable and irrevocable beneficiaries, when and why each type of beneficiary is appropriate, what happens if an irrevocable beneficiary dies before the policyholder.

If you are an irrevocable beneficiary but the beneficiary designation changed, or you are a beneficiary and someone claiming to be an irrevocable beneficiary is disputing the beneficiary designation, call the life insurance lawyers at Boonswang Law for help appealing your life insurance claim denial. Beneficiary disputes are notoriously difficult to win. We can help you, and your initial case consultation is free of charge!

Differences Between a Revocable & Irrevocable Beneficiary

Revocable Beneficiary of Life Insurance

When the beneficiary designation is revocable, the policyholder may change the beneficiary designation at any time without the former beneficiary’s consent or even knowledge. They may even change the life insurance beneficiary just before they die. This is by far the most common type of beneficiary.

Why You Would Designate a Revocable Beneficiary

Generally, policyholders are free to change their beneficiary designations any time during the policy term. This freedom is necessary to account for changes in relationships or if a beneficiary dies and the policyholder must select someone else.

Irrevocable Beneficiary of Life Insurance

An irrevocable beneficiary designation is one that cannot be changed by the policyholder without the beneficiary’s consent. 

If the policyholder seeks to make changes to the policy, such as adding beneficiaries or changing the percentage of the death benefit each beneficiary receives, the life insurance company must inform the irrevocable beneficiary. If the policy gets cancelled by the policyholder or for nonpayment of premiums, the life insurance company must inform the irrevocable beneficiary.

Why You Would Designate an Irrevocable Beneficiary

Policyholders creating life insurance trusts for their minor children often designate that trust as the irrevocable beneficiary of their life insurance policy, to ensure that their children receive a payout when the policyholder dies. 

Some policyholders are child support or spousal support obligors and are ordered by the court to designate their support obligees as irrevocable beneficiaries, to ensure that the obligees receive the income they need should support payments cease because the policyholder died. In these cases, often the divorce decree overrides the named beneficiary. A will does not supersede a beneficiary designation.

Is an Irrevocable Beneficiary the Primary Beneficiary?

Yes. The irrevocable beneficiary is always the primary beneficiary, meaning that the irrevocable beneficiary receives the entire death benefit first. The policyholder may name secondary or contingent beneficiaries, but these beneficiaries only receive a payout if the irrevocable beneficiary predeceases the policyholder.

Removing an Irrevocable Beneficiary

If the policyholder seeks to remove an irrevocable beneficiary, they must obtain the written consent of the irrevocable beneficiary. Usually beneficiary designation forms give the option for an irrevocable beneficiary to sign and give their consent to a change.

Which Type of Beneficiary is Right for You?

Usually, policyholders opt to designate revocable beneficiaries to have the freedom to redesignate beneficiaries as life and relationships change. However, if you have minor children or are a support obligor, you may want to or be forced to name irrevocable beneficiaries.

What Happens if an Irrevocable Beneficiary Dies Before a Policyholder?

If an irrevocable beneficiary predeceases the policyholder, and there are no other irrevocable beneficiaries, the policyholder is free to designate a beneficiary of their choice. In the alternative, the payout goes to any secondary or contingent beneficiaries the policyholder names. If there are no life insurance beneficiaries, the death benefit pays to the policyholder’s estate.

How a Life Insurance Lawyer Helps

If you are the beneficiary of a life insurance policy and someone claims to be the irrevocable beneficiary, or if you are the irrevocable beneficiary and someone else was named, call us. We have helped beneficiary clients across the nation get the payout their loved one intended. Let us help you too. Call us today to discuss your case – free of charge!

Divorce Decree

Does a Divorce Decree Override a Named Beneficiary?

Sometimes. It depends upon what state and federal law controls the life insurance policy and whether the policyholder was married in a community property state or not.

Learn from the nation’s top life insurance lawyers how divorce may affect a life insurance beneficiary designation. If your spouse or ex spouse had life insurance and died and you believe you should be the beneficiary, call us. We have helped clients across the country get the life insurance payout they are entitled to.

Named Beneficiaries in Life Insurance

Under most circumstances, a named beneficiary receives the life insurance payout even if the policyholder’s will says otherwise. However, certain legal situations may change that. This situations include:

  • If the insured was married in a community property state
  • If the insured failed to change the beneficiary designation after divorce in a revocation upon divorce state
  • If the insured changed an irrevocable beneficiary designation
  • If the insured named someone other than the beneficiary designated by court order

If any of these apply to your spouse or ex spouse and you think you should be their life insurance beneficiary but are not, call us – we may be able to help you.

Who Becomes the Beneficiary of a Life Insurance Policy After a Divorce

The answer to this is, it depends.

Many states have revocation-upon-divorce laws that eliminate an ex spouse as a policyholder’s beneficiary automatically upon divorce. This means that a policyholder must designate someone else as the beneficiary. Otherwise there will be no named beneficiary if the policyholder dies, the death benefits may pay to the estate.

*Note that a will does not supersede a beneficiary designation. If the policyholder wishes to change beneficiaries, they must do so following the procedures provided by the life insurance company.

Can a Divorce Decree Override a Named Beneficiary?

Yes. If the policyholder was married in a community property state and got divorced, the ex spouse may be entitled to some of the death benefit regardless of who is the named beneficiary.

Also, if the policyholder is a child support or spousal support obligor, is under court order to name their support obligees as life insurance beneficiaries, and fails to do so, those support obligees may be entitled to the death benefit regardless of who is the named beneficiary.

In either of these cases, the people who believe they should be the named beneficiaries but are not must file an interpleader and contest the beneficiary designation. Beneficiary disputes are notoriously difficult to win. Call us for help if you need to dispute a beneficiary designation.

States that Revoke a Person’s Beneficiary Rights Following Divorce

As of this writing, the following states have some form of revocation-upon-divorce statute that automatically removes an ex spouse as life insurance beneficiary after divorce:

  • Alabama
  • Alaska
  • Arizona
  • Colorado
  • Florida
  • Hawaii
  • Idaho
  • Iowa
  • Massachusetts
  • Michigan
  • Minnesota
  • Montana
  • Nevada
  • New Jersey
  • New Mexico
  • New York
  • North Dakota
  • Ohio
  • Pennsylvania
  • South Carolina
  • South Dakota
  • Texas
  • Utah
  • Virginia
  • Washington
  • Wisconsin

A few states like California do not have revocation-upon-divorce statutes.

How Federal ERISA Law Treats Life Insurance and Divorce

Bear in mind that if the policyholder has group life insurance through their employer, that policy is governed by ERISA which supersedes state law. Under ERISA, a named beneficiary cannot be changed by the act of divorce. Therefore, if a policyholder lives in a revocation-upon-divorce state, names their spouse as their life insurance beneficiary, and then gets divorced, their ex spouse remains as their beneficiary.

If a policyholder does not wish their ex spouse to benefit from their death, they must update their group life insurance beneficiary themselves as any state revocation-upon-divorce law has no effect.

Re-Designating a Beneficiary Following Your Divorce

Many revocation-upon-divorce states specify a procedure to redesignate an ex-spouse as a life insurance beneficiary following divorce. 

Redesignation is common when the policyholder is a child support obligor or a spousal support obligor and is under court order to name their obligees as life insurance beneficiaries. Beneficiary redesignation ensures that the obligees’ income stream continues upon the policyholder’s death.

Rights to Life Insurance of Divorced Spouses

Someone may be entitled to a portion of their ex spouse’s death benefits even if they are not named as beneficiaries on the life insurance policy. 

In community property states, income earned during the marriage qualifies as community property – meaning, that income belongs to both spouses equally. If the policyholder paid some or all of their life insurance premiums with that income, their ex spouse may get a prorated portion of the life insurance payout even if someone else is the designated beneficiary.

Talk with an Experienced Life Insurance Lawyer

We have experience in every state in the nation, as well as with working under federal ERISA law, helping life insurance beneficiaries and those who are otherwise entitled to some of the death benefits get their due. Let us help you too with either an appeal of your life insurance claim denial or an interpleader action to challenge the beneficiary designation. Call us today to discuss your case, free of charge.

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Stranger Originated Life Insurance

Stranger originated life insurance is frequently pitched as a way for older individuals to get a tax-free payout. The arrangement may be called an “estate maximization plan,” a “no cost to the insured plan,” a “zero premium life insurance policy,” or a “new issue life settlement.” Whatever it is called, it requires committing insurance fraud.

If someone approaches you with a life insurance scheme that sounds like this, beware – STOLIs are for the most part illegal. And if you believed you should have been a beneficiary to a life insurance policy and some stranger was named instead, give the life insurance lawyers at Boonswang Law a call. We have helped clients nationwide get the payout they are due.

What Stranger Originated Life Insurance Is

Also called Stranger Owned Life Insurance or STOLI for short, Stranger Originated Life Insurance is a situation in which someone who does not have an insurable interest in the insured pays premiums on a life insurance policy in the name of the insured and is the policy’s beneficiary.

The Purpose of Stranger-Owned Life Insurance

The purpose of STOLIs is to get a tax-free payout. A third party may approach an insurable person and encourage them to apply for more life insurance coverage than their age, earning power, and assets would normally justify. That third party would then pay the premiums. The insured puts the policy into a trust once the contestability period expires and sells it to that third party for a “free” cash payment. That third party then gets a tax-free payout when the insured dies.

This sounds like win-win – the insured and the third party both get a tax-free payout. The losers are the IRS and the life insurance companies. While you may not have much sympathy for these entities, STOLIs contribute to higher taxes and higher premiums for the rest of us.

Is Stranger Originated Life Insurance Legal?

STOLIs are generally illegal but where they are not, they are at the very least unethical. Most are merely schemes to gain tax free money through fraudulent financial reporting.  Forging a signature on a life insurance policy is always illegal.

A third party can create an insurable interest in someone by loaning them money. If the insured died they would leave the loan unpaid, creating an insurable interest.

When Someone Can Take Out a Life Insurance Policy on Someone Else

Policy Owners Must Have an Insurable Interest in the Insured

Legally, someone must have an “insurable interest” in the insured in order to purchase a life insurance policy in their name and name themselves as beneficiary. 

The purchaser of a life insurance policy has an “insurable interest” in the insured when their finances would be adversely affected by the death of the insured. Some states set forth who has an insurable interest in the insured, such as a loving relationship, i.e., spouse, children, parents, or siblings.

The insurable interest requirement ensures that the policy owner/beneficiary has more than a financial interest in the insured. Presumably, someone in a loving relationship with the insured would hope for their long life as well as a death benefit when they die, not just their death so that they can get their payout.

An Employer May Have an Insurable Interest in an Employee

A corporation with an insurable interest in the insured may also own a life insurance policy in the insured’s name, called a corporate-owned life insurance (COLI) policy. COLIs generally require the consent of the insured.

For example, a company may insure a highly-experienced and valued employee so that they have the funds to hire a comparable replacement should that employee die. The insurable interest is the company’s interest in keeping that employee alive and working for them. 

Talk With an Experienced Life Insurance Lawyer

If you thought you were the beneficiary to a loved one’s life insurance policy but a stranger was named instead, call us. You may not get the death benefit after all if the insured committed insurance fraud, but if a stranger took advantage of the insured you may still get paid. 

We take cases on contingency only to minimize out-of-pocket expenses to you. Call us to discuss your case, free of charge!

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Life Insurance Conversion Privilege

Life Insurance Conversion Privilege

What is life insurance conversion privilege, and how does it affect policyholders and their beneficiaries? Find out from the life insurance lawyers at Boonswang Law, who have gotten beneficiary clients paid in every state in the nation when life insurance companies delay or deny claims for death benefits.

If the life insurance company denied your claim for death benefits due to lapse, termination, or failure to convert, call us. Often the lapse in coverage was no fault of the policyholder, and in those cases, we can get you paid. Call us to discuss your case, free of charge!

Life Insurance Conversion Privilege Definition

In general, “conversion privilege” in life insurance is a policyholder’s right to convert a life insurance policy from one type to another without submitting to a medical exam or completing a new application. Conversion privilege may also guarantee the amount the policyholder pays in premiums for coverage under the new life insurance policy. Some policies may also refer to this as a “guaranteed insurability option”.

Types of Life Insurance Conversions

Group to Individual Life Insurance

By far, the most common type of conversion carrying privilege is when an employee or former employee converts their group life insurance coverage through their employer to an individual policy. Conversion privilege guarantees individual coverage regardless of the policyholder’s health, and guarantees premium payments for a specified number of years.

Term to Permanent Life Insurance

Term life insurance is the least expensive insurance someone can purchase because it provides coverage for a set number of years, called the “term,” then expires. If a policyholder wishes to renew their coverage once the term expires, chances are that their premium payment will increase because they have aged and there is greater risk they will die within the policy term.

If a term life insurance policy carries conversion privilege, the policyholder has the option to convert the policy to permanent life insurance without submitting to a medical exam. This option allows a policyholder to maintain coverage even if they suffer health problems near the end of the term.

Conversion privilege in a term life insurance policy will likely have an expiration date, and once the policyholder converts to a permanent policy they will likely pay more in premiums. However, conversion privilege gives a policyholder with health problems the option of maintaining life insurance. If they had to apply for a new policy, their coverage might get denied due to their present health.

There are many types of permanent life insurance, but most commonly they are called “universal” or “whole” policies. 

Life Insurance Conversion Privilege Requirements

In order to convert a life insurance policy, the policyholder must strictly adhere to the terms of the provision in the policy itself. This provision will set forth the required documents, timeline, and due date, which will vary among policies.

If a policyholder fails to comply with the requirements set forth in the conversion privilege provision, they risk losing life insurance coverage. This might be a problem if the policyholder does not have multiple life insurance policies, but chances are the policyholder purchased this coverage for a reason, and unless that reason dissipated, they must carefully follow directions to convert their policy effectively.

Employer Obligations Concerning Life Insurance Conversions

Providing a Policy to the Insured

Federal ERISA law governs employer-provided group life insurance coverage, whether entirely subsidized by the employer or paid in part by the employee. Under ERISA, an employer must provide covered employees with a copy of the policy itself and inform them of the right to purchase accidental death and dismemberment coverage (AD&D coverage) as a rider.

Inform Insured of Conversion & Portability Rights

An employer has a duty to tell a covered employee of their right to continue coverage should they leave employment, and how to do so, in writing. They also must inform them of their right to apply for a waiver of life insurance premium for disability, if they become disabled.

Provide Information on Policy Changes

If any aspect of life insurance coverage changes, the employer must provide notice of that change in writing to all coverage employees.

Should You Convert Your Life Insurance?

Whether you are seeking to convert employer-provided group life insurance coverage to an individual policy, or someone holding a term life insurance policy who is considering converting to a permanent life insurance policy, there are several aspects of coverage to weigh in making your decision.

First, do you need life insurance after you leave your job or your term life insurance coverage expires? If you do, you will either need to convert your existing life insurance coverage or purchase a new policy.

Second, consider whether you will pay less in premiums when you convert than if you should purchase new coverage. This will require some research on your part. Factors such as your current age and health will affect the relative cost of each option.

Last, consider whether the needs of your beneficiaries will be best met by converting your policy or by purchasing new coverage. What are their needs? Is there an end date to those needs or are they continuing? How old is your beneficiary and what is the likelihood they will predecease you? All of these questions must be answered and weighed before you make a decision to convert an existing policy or to purchase new coverage.

Life Insurance Conversion vs Portability

If group life insurance coverage is “portable” an employee can take this coverage with them when they leave employment, and simply pay their employer the premiums. This option is usually available to employees who are younger than 69 and not leaving their employer due to illness, injury, or retirement. Most “ported” group life insurance will cover a former employee until age 70. 

Portability may be a more cost-effective option than conversion for an employee seeking to leave work but maintain life insurance coverage. The employee should compare the cost of premiums, the breadth of coverage, and whether they will need coverage past age 70 in making this decision.

Failing to Convert Your Life Insurance Policy

If a policyholder fails to convert their life insurance policy before the required deadline in term life insurance, or before the date provided in the conversion packet provided by their employer, life insurance coverage will lapse and terminate. This means that the life insurance company will deny a claim for death benefits due to lapse. However, there still may be something that can be done, and the beneficiary should appeal the life insurance claim denial.

Talk with an Experienced Life Insurance Lawyer

Unfortunately, many policyholders and employees get faulty advice from their agent or their employer and fail to effectively convert their policy as they intended. If the failure to convert was no fault of the policyholder or employee, their beneficiaries may still get a payout.

If your claim was denied due to lapse caused by failure to convert, talk with the life insurance lawyers at Boonswang Law. We investigate the cause of the lapse and if the policy would have converted but for the failure of an agent or employer to adhere to their legal requirements, we can get you paid. Call us at (855) 553-9010 to discuss your case with us, free of charge.

Can You Have Multiple Life Insurance Policies?

Can You Have Multiple Life Insurance Policies?

Can You Have Multiple Life Insurance Policies?

Yes, you may purchase multiple life insurance policies. Many people who purchase life insurance purchase multiple policies for different reasons. Learn from the life insurance lawyers at Boonswang Law about the types of life insurance policies available, the reasons for owning multiple life insurance policies, why the amount of life insurance you own can be limited, and what alternatives you have to owning multiple policies.

Owning Multiple Life Insurance Policies

When you own more than one life insurance policy, you must complete separate applications and medical questionnaires for each policy. Be sure that the information you provide is accurate and consistent across all policies. If it is not, you risk an allegation of life insurance misrepresentation and the chance your beneficiary or beneficiaries do not get their payout.

Be sure to organize your policies so that you know when premiums come due, and pay them in full and on time. If you miss a premium payment, you risk life insurance lapse and termination, and again, the life insurance company will deny your beneficiaries’ claims. Lapse is one of the most common reasons life insurance companies deny claims for death benefits.

Reasons to Have Multiple Policies

Common reasons to have more than one life insurance policy include:

Limits On Your Life Insurance Amount

The amount of coverage you can purchase will be limited by factors such as your age, health, occupation, and net worth. For example, someone who works at minimum wage and is 65 years old will not be able to purchase a $1,000,000 policy.

When you apply for an additional policy, the life insurance company takes into consideration the amount of coverage you already have when determining the amount of coverage they will offer you.

Differences in Life Insurance Policies

These are the various types of life insurance:

Term Life Insurance

This is the most common type of life insurance. Someone purchases a set amount of coverage for a term, say, 10 or 25 years, and if they die within the policy term their beneficiary or beneficiaries receive the face amount of the policy as a death benefit.

Whole Life Insurance

Whole life insurance can work like term life insurance as far as payouts to beneficiaries goes, but unlike term life, whole life accrues cash value as the insured pays premiums. The insured can borrow against that cash value subject to some restrictions.

Group Life Insurance Through an Employer

Employers often offer life insurance coverage to their employees at no or little cost, as a benefit to employment. The amount of coverage will likely be a multiple of the employee’s annual salary. If the employee leaves their job, they have the option of converting their coverage to an individual policy.

Funeral Expense Insurance

These types of policies typically are inexpensive and have a face value of $10,000 or $15,000. Funeral Expense policies pay end-of-life and funeral expenses.

Multiple Life Insurance Policies Alternatives

Instead of purchasing more than one life insurance policy, one might consider naming a  beneficiary to their savings account, checking account, investment account, retirement account, or pension. For example, someone who has purchased the maximum amount of life insurance coverage they are eligible for should consider these alternatives when planning to provide for loved ones should they die.

How An Experienced Life Insurance Lawyer Helps

If you own multiple life insurance policies, you must organize this documentation so that when you die your beneficiaries will be able to access and understand the coverage you have.

If you struggle to understand multiple life insurance policy coverage, call us. Our experienced life insurance lawyers have helped beneficiaries across the country understand their rights and get the benefits they deserve. Call 1-855-347-1279 today to discuss your case – free of charge!

Can You Sue for Life Insurance Proceeds?

Can You Sue for Life Insurance Proceeds?

The answer is yes. There are four circumstances under which you can file a lawsuit to collect life insurance death benefits. 

  1. The life insurance company is unreasonably delaying payment of your claim for death benefits. 
  2. The life insurance denied your claim for death benefits.  
  3. There is a beneficiary dispute. 
  4. A creditor can sue someone to collect on a debt, obtain a money judgment, and collect from the life insurance proceeds the debtor received if state law allows. For example, Florida life insurance laws prohibit creditor collection on life insurance proceeds.

This article will explain the three scenarios that warrant a lawsuit against the life insurance company. If your claim for death benefits was denied or is being delayed for no good reason, or if you want to contest a beneficiary designation, call the experienced life insurance lawyers at Boonswang Law to discuss your case, free of charge. You don’t have to fight the life insurance companies alone!

How to Sue if the Life Insurance Company is Unreasonably Delaying or Denied Payment of Your Claim

If 30 days have passed since you filed your claim for death benefits and you have not heard from the life insurance company, or the life insurance company tells you they are still investigating, or the life insurance company denied your claim, it is time to discuss your case with an experienced life insurance lawyer.

Why do you need to work with a life insurance attorney? Because life insurance companies operate like any other business – to make a profit. To this end, life insurance companies seek to collect more in premium payments than they pay out in claims for death benefits. In other words, their quest for profits puts their interests in conflict with the interests of the insured and your interests as beneficiary.

Life insurance companies employ teams of attorneys to justify delaying and denying what are later determined to be valid life insurance claims. To level the playing field, you need your own experienced legal representation if your claim is not paid within 30 days. And if the delay in paying your claim was unreasonable, you may be entitled to interest on the death benefits!

Steps to Take When Your Life Insurance Claim is Delayed or Denied

  1. Collect all correspondence from the life insurance company regarding your claim, as well as a copy of your completed and filed claim form and the policy itself, if available.
  2. Consult with an experienced life insurance attorney, who will assess your case free of charge. Reputable life insurance lawyers take cases on contingency, meaning that they do not get paid unless you do.
  3. Let your life insurance lawyer negotiate with the life insurance company to get your payout. Our team has been able to settle many cases and get our beneficiary clients paid at this stage. Call us at 1-855-397-6236 for immediate help.
  4. If the life insurance company will not pay, your life insurance attorney will draft and file a complaint against them under the laws of your state, and advocate for you in court.

State law varies as to how to dispute a delayed or denied life insurance claim. Rest assured that our team of life insurance lawyers has experience in every state in the nation. We can efficiently and effectively employ your state’s legal process to get you paid, if and when negotiations with the life insurance company fail. Call us for your free, no-obligation consultation.

How to File a Life Insurance Beneficiary Dispute

There are several circumstances under which you may want to contest a life insurance beneficiary designation. In these cases we will represent you in what is called an interpleader, and the life insurance company will delay paying death benefits until a court resolves the beneficiary dispute.

The Life Insurance Beneficiary Designation Changed at the Last Minute

Are you suspicious of a last-minute beneficiary change from you to someone else? Perhaps you suspect that the insured changed the beneficiary designation under duress, or perhaps was not of sound mind when they made the change.

If you are the former named beneficiary, you have standing to file suit. Be advised that it is very difficult to prove that someone, perhaps a relative, romantic partner, or caregiver, pressured the insured to change the beneficiary designation to themselves. It is also difficult to prove that the insured lacked the capacity to make the change.

Call us for help if you suspect the insured changed beneficiary designation from you to someone else under duress or lacking the capacity to do so. We will assess your case free of charge.

The Life Insurance Beneficiary Designation Changed After the Death of the Insured

A life insurance beneficiary designation cannot be changed after the death of the insured, for any reason. Only the insured has the power to make changes to their life insurance policy.

If the date of the change in life insurance beneficiary designation is after the insured’s date of death, that change is fraudulent. If you are the formerly-named beneficiary, call our experienced life insurance fraud lawyers for help getting the death benefits the insured intended you receive.

The Life Insurance Beneficiary Designation Changed Contrary to Court Order

Many child support and spousal support obligors are under court order to name the obligees as beneficiaries to their life insurance policy. If the insured changed the beneficiary designation to someone other than the support obligees contrary to court order, the obligees have standing to file a beneficiary dispute.

State law varies as to how this change in beneficiary designation is treated, especially in community property states where the insured was married and changed the beneficiary designation to their spouse. Our life insurance lawyers have extensive experience unraveling the complex web of laws and regulations governing beneficiary designations in each state. Contact us for help – free of charge.

The Insured Had Group Life Insurance

Many states have revocation-upon-divorce statutes, which revoke an ex-spouse’s life insurance beneficiary designation automatically. However, if the insured had group life insurance, the beneficiary designation is controlled by a federal law called ERISA which overrides state law and an ex-spouse can remain the named life insurance beneficiary. 

This gets even more complicated in community property states, where spouses and ex-spouses may be entitled to some or all of the death benefits in certain circumstances. Call us for help if you are a spouse or an ex-spouse grappling with this situation. 

Call Boonswang Law for Help with Your Life Insurance Lawsuit

Whether you are a named beneficiary struggling to get your life insurance claim paid, or you are a former beneficiary and believe you should still receive the death benefits, we can help. We have helped life insurance beneficiaries nationwide get the death benefits they deserve. Call us at 1-855-898-4158 to discuss your case. Our goal is to get you paid!

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