Articles Tagged with: Claim Denied Due to Lapse

Life Insurance Company Not Paying Full Amount?

This article will explain the common ways in which life insurance companies underpay valid beneficiary claims for death benefits and the reasons why.

If your claim is denied for a valid reason, there may be a way to negotiate a settlement for part of the claim depending upon the reason that the claim was denied. In some instances, settling for a portion of the death benefit is better than getting no payout at all.

If your claim is delayed, you may be entitled to interest. Do not let the life insurance company make money from keeping you waiting for your payout. Get your entire payout, including claim interest.

Our life insurance attorneys can help you if your life insurance claim is delayed or denied. If you are a life insurance beneficiary anywhere in the United States, we can help you get paid. Call us for your free, no-obligation case evaluation. We do not get paid unless you do.

Life Insurance Companies Only Make Money When They Don’t Pay Life Insurance Claims

Life insurance companies are like any other company – they are responsible to their shareholders to make a profit and provide dividends on their investment.

For this reason, life insurance companies will use any excuse to deny or delay paying a life insurance claim for death benefits. Life insurance companies hope that beneficiaries are unaware that they can fight the delay or denial, and will just take no for an answer.

We get beneficiaries’ claims paid every day. Call us for help, and we may be able to get you paid, too.

A Life Insurance Company May Initially Deny a Life Insurance Claim Due to Lapse or Termination, But You May Be Entitled to All or Part of the Death Benefit.

If your life insurance claim was denied because the insured failed to pay premiums and the policy lapsed or terminated, you may still be able to get paid.

Why? Because often the reason that the life insurance policy lapsed or terminated was not the fault of the insured. For example, if the insured was hospitalized and never received the mandated notices of lapse from the life insurance company, the policy may still pay out less the premiums that the insured was responsible for paying. 

Lapse When the Insured Should Have Had Disability Waiver of Premium

If a life insurance policy lapses due to nonpayment of premiums, the insured was entitled to a waiver of premiums due to disability, and the insurance company did not approve the waiver, a beneficiary may be entitled to the full amount of the death benefit.

Lapse Due to Employer’s Improper Administration of Group Life Insurance

If the insured maintained group life insurance through an employer, there are several ways you can get paid the death benefits despite lapse or termination:

  • Employer failed to provide mandated notices for conversion to private policy;
  • Employer failed to provide mandated premium waiver application if the insured became disabled; and/or
  • Employer stopped paying premiums for any improper reason.

Beneficiary problems with employer group life insurance are common. In these cases, a beneficiary may be entitled to the full amount of the death benefit payout.

A Life Insurance Company May Initially Deny a Claim for Death Benefits Due to Misrepresentation, But You May Be Entitled to All or Part of Your Claim.

A life insurance company will deny a claim if there is any indication that the insured misrepresented themselves on the initial application or medical questionnaire, even if the alleged misrepresentation had nothing to do with the cause of death. 

However, there are circumstances under which the beneficiary can get the death benefit minus what the insured would have paid in premiums if the life insurance company knew of the missing fact.

Common mistakes or omissions that a life insurance company will call a misrepresentation include:

  • Misstating year of birth;
  • Misstating address;
  • Misstating employment;
  • Misstating marital status;
  • Omitting a health condition of which the insured was unaware;
  • Omitting any medical condition because the question on the application was unclear;
  • Failing to disclose a past medical condition because the question was unclear.

These are all examples of information that factor in an insurance adjuster’s assessment of the risk that the insured will die within the policy term, and policy premiums are calculated accordingly. 

Those at greater risk of dying within the policy term will pay higher premiums than those at less risk. For example, if an insured misstated their year of birth, such as transposing digits from 1967 to 1976, they will pay less in premiums than if the adjuster knew their real age because someone born nine (9) years later is less likely to die within the policy term. 

In this case, as long as there is no indication that the insured intended to commit fraud, a top life insurance law firm can help you negotiate with the insurance company to be paid the death benefit minus the amount in premiums that the insured would have paid if the insurance company knew their real age.

If Agent Mistake or Negligence Caused the Alleged Misrepresentation, You May Be Entitled to the Entire Death Benefit

It is common for an insurance agent to fill out an application for the insured when the insured visits the agent’s office or the agent comes to the insured’s home to sell a policy. The agent will typically access the life insurance company’s online application, ask the insured questions, and type in the answer.

Under these circumstances, mistakes or omissions are not the fault of the insured and do not constitute misrepresentation:

  • The agent makes a mistake;
  • The agent fails to ask a question and answers it themselves;
  • The agent receives a truthful answer from the insured but inserts a different answer;
  • The agent coaches the insured to answer incorrectly;
  • The agent fails to ask about obvious medical conditions, such as the insured being in a wheelchair, having a cast on their arm, or needing a respirator to help breath;
  • The agent fails to ask follow-up questions if the insured answers in such a way as to indicate there is an underlying medical condition (for example, if the insured takes insulin) but has not disclosed that the person has diabetes.

An experienced life insurance beneficiary attorney can investigate the alleged misrepresentation, and if any of these circumstances apply, you may still be paid a portion or the entire death benefit.

An Insurance Company May Delay Paying a Life Insurance Claim – You Are Entitled to Interest!

Common Reasons Why a Life Insurance Company Will Delay Payout

Life insurance companies must pay claims within a “reasonable” time, otherwise they must pay the beneficiary interest on the death benefit. Typically that means insurance companies will pay valid claims within 30-60 days, but if they delay paying a claim any longer, contact us. We can help you get paid your entire life insurance claim, which could include interest.

Don’t Take No For An Answer! Our Experienced Life Insurance Lawyers Can Help You Get Paid.

If your life insurance claim has been delayed or denied, we can help. You may still be entitled to partial death benefits, the entire death benefit, or the entire death benefit plus interest. Know that if we take your case, we expect to win! Call to schedule your free, no-obligation case evaluation as soon as you get the sense that you are not getting paid on a life insurance policy.

What You Need to Know About Life Insurance Waiver of Premium for Disability

Strict and complex state and federal laws govern employer-provided life insurance. Despite heavy regulation, the claims of beneficiaries of group life insurance are often improperly denied.

Having represented thousands of beneficiaries whose claims were delayed or denied, we have found that employers or life insurance companies often run afoul of those laws, causing a lapse in coverage and improper denial of beneficiaries’ claims. 

If your claim was denied but the insured should have been eligible for life insurance disability waiver of premiums, we can help get you paid.

For an insured, if you have become disabled and your life insurance company denies your request for waiver of premium payments, you must file an appeal under ERISA. 

For a beneficiary, if your claim was denied due to lapse in coverage caused by non-payment of premiums, you should call us at 1-855-865-4335. It may be that the employer wrongfully ceased paying premiums on behalf of the insured or improperly handled the insured’s request for waiver of premium payments, or the insurance company mishandled the waiver request or improperly denied it. We will find out for you.

These are two of the most common reasons a life insurance claim is denied. In either case, you need an experienced and diligent life insurance attorney by your side to fight for your rights under the employer group life insurance policy and the Employee Retirement Income Security Act of 1974 (ERISA). Give us a call to schedule your free, no-obligation, no-risk consultation. We never get paid unless you do.

What Does Life Insurance Waiver of Premium Mean?

Life insurance coverage usually only continues as long as the premiums are paid. However, a person who is disabled and unable to work may be entitled to continuing coverage under the employer’s group life insurance plan and have the premium payments waived during the period of disability.

Most group life insurance policies will have a waiver of premium provision or a disability premium waiver rider that will set forth the required information and documentation for waiver of premium for disability.

What is the Waiting Period for a Waiver of Premium Rider?

The waiver of premium waiting period varies among insurance companies, but commonly an employee who becomes disabled and is out of work must wait six months before applying for a waiver of premium.  

What the insurance company and the employer does in those six months will dictate whether the insured continues coverage under the policy, or the policy lapses.

Was Your Claim Denied Due to Lapse?

If the insured was disabled and out of work before dying and had employer-provided term insurance with a waiver of premium rider, but a beneficiary’s death benefit claim was denied due to lapse, it might be because the policy lapsed and was terminated improperly. It is common for either the employer or the life insurance company to mishandle or improperly deny the employee’s request for disability waiver of premium payments.

Employer Responsibility for Group Life Insurance Under ERISA

Employers frequently provide group life insurance for their employees as part of their benefit package. Often the group policy also covers the employee’s qualified dependents.

In some cases the employer will pay the premiums on behalf of employees. In others, the employer will pay the premium in part or not at all, and deduct that cost from the employees’ paychecks.

The amount of coverage the employee purchases is usually based upon a multiplier of the employee’s annual salary and will also depend upon whether the employee opts for any supplemental insurance, such as an AD&D (accidental death and dismemberment) rider.

Employers Have a Fiduciary Responsibility to Act in the Best Interests of Employees With Regard to the Group Life Insurance Policy

The employer, or the employer’s human resource department, is responsible for explaining the benefits and responsibilities of the employee under the group life insurance plan.

Unfortunately, employers often fail to provide employees with the policy itself, or with any information about what is a qualified loss and who is a qualified dependent, or even with the application they need to complete and submit to continue coverage under the plan should they become disabled and unable to work. 

In any of these cases, the employer is responsible for any lapse in coverage, and despite that lapse the beneficiary can be paid. For example, in a recent case, we got our client’s death benefit claim paid when the insured was out of work on short-term disability, and the insured’s employer failed to provide an application for waiver of premium or an application for conversion to an individual policy within the required 31-days. 

In another recent case, we got our client’s death benefit claim paid when the insured could not work due to battling colon cancer, and again, his employer failed to provide an application for waiver of premium or notice of the right to convert to an individual policy.

Insurance Company Responsibility under ERISA

The policy provision or rider pertaining to waiver of premium payments due to disability will define “totally disabled,” and every insurance company defines it differently. Usually, the definition takes some form of the following:

A person is “totally disabled” for the purpose of life insurance premium waiver if that person is unable to perform the duties of an occupation for which he or she is qualified by education, training, or experience, and that disability was caused by an injury or illness.

Often life insurance companies deny a premium waiver application and argue that the insured does not meet the definition of “totally disabled”. Then, if the premium is not waived and the insured fails to pay the premium, the policy lapses.

In these cases, we vigorously challenge that decision and argue that it should be reversed and the beneficiaries paid on their claims. We have been very successful in getting denial of disability premium waiver cases reversed and getting our clients paid. 

Insurance Companies Make Mistakes, Too

We have also been successful in getting our beneficiary clients paid where coverage lapsed because the life insurance company:

  • made an administrative error, 
  • mishandled the premium waiver application, or 
  • did not properly apply premium payments to the insured’s account.

We Get Beneficiaries Paid

The experienced life insurance beneficiary attorneys at Boonswang Law can help you find out if the employer or the insurance company was at fault for coverage lapse when the insured should have been eligible for waiver of premium for disability. Call us at 1-855-865-4335 or complete the online contact form, and we will discuss your case with you, free of charge.

AARP Life Insurance Claim Denied Due to Lapse – What To Do

Sound familiar? It happens more often than one would think. If this happens to you or someone you love, don’t feel powerless – there is something you can do about it.

Even if Denied, You May Still Receive the Benefits

When someone buys a life insurance policy, whether through AARP or another administrator, the insurance company’s obligation to pay the designated beneficiary is contingent upon whether the monthly premiums have been paid. Simply put, if the policyholder does not pay the insurance company, the insurance company will not pay the beneficiary.

Yet there are exceptions to this general rule. Read on to discover the circumstances under which a beneficiary might yet receive the insurance proceeds even if there is a lapse in payment and the claim is initially denied.

What Happens When There is a Lapse in Payment?

Insurance companies typically have a “grace period” for making late payments, usually around a month from the due date. If the insured fails to pay on time, there is an opportunity to make up that payment and remain covered during this grace period. Be sure to check with the insurance provider to find out whether a cure of the lapse occurred within the policy’s “grace period.”

Keep in mind also that if the insured died just after the lapse in payment, you may be able to recover payment with the help of an experienced life insurance attorney.

What Happens When There is a Lapsed Policy?

If the insured does not cure the lapse in payment within the grace period, the policy itself will “lapse.” This means that the insured is no longer covered under the policy.

Even if the insured had been making premium payments diligently for decades, if he or she missed one premium payment beyond the designated grace period, the policy is lapsed. If the insured dies just one day after the policy lapsed, you can bet that the beneficiary’s claim will be denied.

Even so, you should appeal that denial with the assistance of a seasoned life insurance attorney because there may be a way to get you paid. For example, recently we got a beneficiary’s claim paid in full where the insured, having faithfully paid premiums for over 28 years, was hospitalized with congestive heart failure and missed getting notice in the mail, and the notice itself was not compliant with state law.

In an even more egregious case, an insured paid premiums in full and on time for 15 years before being diagnosed with cancer and undergoing chemotherapy. The insured was never sent notice of non-payment, lapse, or termination, all of which are required by law. Our beneficiary client was paid in full.

Keep in mind that while these are real pay-outs, we cannot guarantee the same result in any other matter.

Following are several defenses available when coverage lapses. These depend primarily on the form of coverage purchased, the timing of the death, and the last premium payment made.

Term Life Insurance

If the insured had term life insurance, frankly, the options are limited. The policy will lapse, and future payments will not restart coverage.

The insured could “reinstate” the policy by contacting the insurance provider. To reinstate,  companies generally require the insured to fill out another application and to let them know if his or her health has changed. Additionally, the insurance company may require a new medical exam before reinstating the policy. This depends on how long it has been since the “grace period” ended.

Upon reinstating the policy, the insured will have to retroactively pay the premiums for the time coverage lapsed. This means that the longer the insured wait after coverage lapses, the more money he or she will have to pay before the policy is reinstated.

But even if you are a beneficiary of a term life insurance policy that has lapsed, get in touch.  We do everything we can to support an argument that you should be paid anyway. This include looking carefully at all of the facts surrounding the purported lapse, such as the timing of the death with the grace period, whether the required notices were sent, and whether they were sent to the right address, within the time prescribed, and containing all language required by statute.

Permanent Life Insurance

Permanent life insurance is more expensive than term life insurance, but it is also more forgiving of nonpayment. The two types of permanent life insurance are called whole and universal.

As with term life insurance, one option is to reinstate your previous policy by reapplying and retroactively paying the premiums you missed. If you cannot pay the required amount for reinstatement, however, there are two other choices available:

Permanent Life Insurance Policy Death Benefit and Cash Value

Many permanent life insurance policies combine a “death benefit” (i.e. how much the beneficiary gets paid if/when the owner dies), as well as a “cash value.” This cash value functions as a savings investment separate from the death benefit. In this case, you may have the option to “cash out” your life insurance by withdrawing the policy’s cash value (i.e., its accumulated savings) when your death benefit coverage lapses.

Permanent Life Insurance Nonforfeiture Clause

Some permanent insurance policies include a nonforfeiture clause which provides that if the insured stops paying premiums, he or she still receives some sort of benefit.

If coverage lapses, the insurance company will refund part of the premium payments and/or pay the policy’s cash value. With some policies, coverage will not lapse in case of nonpayment. Instead, the policy will remain in place but with a reduced death benefit calculated as a percentage of the paid premiums.

Again, if you are a beneficiary of a lapsed policy, get in touch so that we can see if there are any arguments to be made that you should be paid anyhow. Even if your claim cannot be paid in full, the life insurance company may settle for the death benefit amount minus what the insured should have paid in premiums.

AARP (Or Some Other Life Insurance Company) Denied My Life Insurance Claim – What Can I Do?

If you are unsure of the reason your claim was denied, the first thing to do is contact an experienced life insurance lawyer to review your case. You may also wish to contact the insured’s insurance agent and ask for details regarding premium payments made, the policy’s grace period, reinstatement options, nonforfeiture provisions, and notices sent. The date of death and the date of the latest premium payment will be especially important facts to have in hand. For your information, AARP is merely the administrator of AARP life insurance policies, and some other company underwrites them.

Don’t take the initial denial of your life insurance claim lying down. Take action, especially if one or more of the following applies to your situation:

  • You know or believe the policyholder paid all the premiums and yet your claim got denied, or
  • You think the insurance company failed to notify the policyholder that payment was due, or past due, or lapsed, or,
  • If you believe, based upon the dates of death and of the last premium payment made, that there was an administrative error causing a lapse in the policy when there should not have been a lapse.

Contact an experienced life insurance lawyer to evaluate possible solutions. This firm gets beneficiaries paid!

What To Do When a Life Insurance Claim is Denied Due to Lapse

Lapse is one of the most common reasons life insurance claims are denied.

When a life insurance policy “lapses,” it means that the policyholder or designated payor has not paid one or more required premium payments. Premium payments are required to keep a life insurance policy in force. Policies may require a monthly, semi-annual, or annual payment of a premium.

Most, but not all, states require notices with specific information (designated via state statute) to be sent to the designated payor of the policy when a premium has been missed and a policy is in danger of lapsing.  Failure to fulfill these payments can lead to termination of the policy entirely.

Beneficiaries, take note – if the life insurance company has not complied with the notice requirements of the state, the policy may still be enforced, even if years have passed since the last payment was made. For example, one of our client’s claim was denied ostensibly due to lapse, yet we were able to get her paid. The insured let the insurance company know that he was no longer receiving monthly bills for the premium, yet he continued to make monthly payments. His last premium payment was just short of the amount required, and he died one month later. His beneficiary’s claim was denied. But because we could argue that the insurance company failed to send the required payment, lapse, and termination notices to the insured, it had to pay our client.

Keep in mind that this case study is true, however, we cannot guarantee similar results in any other matter.

Lapse when the Insured is Ill

A common scenario that leads to a policy lapsing is when the insured falls seriously ill or is facing a decline in mental health.  These individuals often miss their premium payments due to their illness.  Courts have been willing to take this scenario into account, especially if the insured has loyally paid their premium up until the time that he fell ill.

The Boonswang Law Firm has extensive experience dealing with these scenarios and have found tremendous success with these illness-related lapse cases. In one such case, the insured paid premiums for 34 years and was diagnosed with dementia in June 2018. The insurance company issued notice in September 2018 of a premium payment due in October, which the wife believed she paid. When the insured dies and the wife’s claim was denied, we used the payment history to show that policy lapse did not occur until six days after the death of the insured, and she was paid the death benefit. Again, these situations are very fact-specific and we cannot guarantee this result in your matter.

Reinstatement of an Insurance Policy After Lapse

If your policy lapses, there can also be an option to apply for reinstatement of the policy.  When one applies for reinstatement, however, the insurance company gets the opportunity to review your most recent medical records to reconsider whether they would agree to insure you.  If your application for reinstatement is accepted, this also resets your two-year contestability period.  Thus, if the insured dies within two (2) years of the effective date of the reinstated policy, the insurance company may contest or deny payment of the death benefit based on any misrepresentation on the reinstatement application.

Life Insurance Claims Within the Grace Period Will Be Paid

Since life insurance policy proceeds are assets upon which many families rely after a loved one has passed on, there are laws in place mandating a grace period when a lapse occurs.  Once a premium payment is missed, the grace period begins.  Therefore, if the insured dies within the grace period (usually 30 days), the insurer may still be required to pay the death benefit.  The grace period also allows time for someone who missed a payment for financial, health, or other reasons to catch up and make the payment before the policy lapses.  Once the grace period is over, however, the policy is considered lapsed and the insurance company will deny payment of the death benefit.

One of our clients was the beneficiary of a policy and her claim was denied due to lapse.  However, the insured had been only three days late on the premium payment, and died three days after that – well within the grace period.  We got our client paid.

In another case we handled, the insured fell into a coma and no one in the family knew of the life insurance policy until they received a notice claiming to be a Lapse Notice, informing of a past-due premium, that the grace period had expired, and that the policy lapsed. There was no information in the Notice indicating when the policy had been paid through, or when the grace period began or ended. Insurance companies are required to provide a 60 day grace period, not concurrent with any time paid coverage is in effect, and must mail a notice of pending lapse to the insured at least 30 days before  the effective date of termination of the policy. We argued that since this insurance company could present no evidence that it had complied with these requirements, the policy must remain in effect, and our client was paid.

Again, keep in mind that although these are real results for real clients, we cannot guarantee the result of any other matter.

If Your Claim Has Been Denied Due to Lapse or Termination, You Need an Attorney to Fight for You

If you have not been paid due to lapse of the life insurance policy, you should contact the national life insurance lawyers at The Boonswang Law Firm.  The problem could be lack of notice – many states require insurance companies to notify policyowners that they have missed one or more premium payments.  If an insurance company has not followed the lapse notice laws of your state, you may still be eligible to receive the policy’s benefits.

Our attorneys are very well-versed in analyzing the lapse notice laws of states throughout the country.  Our concentration in this area has helped us hold insurance companies accountable when they have not complied with the law or when they have been negligent in their accounting or administration of the policy, bringing countless families the financial security that they need by obtaining death benefits that are rightfully theirs.

What Happens When a Life Insurance Policy Lapses?

What does it mean for a policy to lapse?

When a life insurance policy “lapses,” it means that the policyholder or designated payor has not paid one or more required premium payments.  Premium payments are required to keep a life insurance policy in force.  Policies may require a monthly, semi-annual, or annual payment of a premium.

Most, but not all, states require notices with specific information (designated via state statute) to be sent to the designated payor of the policy when a premium has been missed and a policy is in danger of lapsing.  Failure to fulfill these payments can lead to termination of the policy entirely.  If the company has not complied with the notice requirements of the state, however, the policy may still be enforced, even if years have passed since the last payment was made.

Illness-Related Insurance Lapses

A common scenario that leads to a policy lapsing is when a policyowner in charge of paying the policy’s premiums falls seriously ill or is facing a decline in mental health.  These individuals often miss their premium payments due to their illness.  Courts have been willing to take this scenario into account, especially if the policyowner/payor has loyally paid their premium up until the time that he fell ill.  The Boonswang Law Firm has extensive experience dealing with these scenarios and have found tremendous success with these illness-related lapse cases.

Reinstating Lapsed Policies

If your policy lapses, there can also be an option to apply for reinstatement of the policy.  When one applies for reinstatement, however, the insurance company gets the opportunity to review your most recent medical records to reconsider whether they would agree to insure you.  If your application for reinstatement is accepted, this also resets your two-year contestability period.  Thus, if the insured dies within two (2) years of the effective date of the reinstated policy, the insurance company may contest or deny payment of the death benefit based on any misrepresentation on the reinstatement application.

Since life insurance policy proceeds are assets upon which many families rely after a loved one has passed on, there are laws in place mandating a grace period when a lapse occurs.  Once a premium payment is missed, the grace period begins.  Therefore, if the insured dies within the grace period (usually 30 days), the insurer may still be required to pay the death benefit.  The grace period also allows time for someone who missed a payment for financial, health, or other reasons to catch up and make the payment before the policy lapses.  Once the grace period is over, however, the policy is considered lapsed and the insurance company will deny payment of the death benefit.

An Insurance Lawyer Can Help With Lapsed-Policy Claims

When a beneficiary does not get paid after a life insurance policy lapses, the beneficiary should contact the life insurance lawyers at The Boonswang Law Firm.  Many states require insurance companies to notify policyowners that they have missed one or more premium payments.  If an insurance company has not followed the lapse notice laws of your state, you may still be eligible to receive the policy’s benefits.  Our attorneys are very well-versed in analyzing the lapse notice laws of states throughout the country.  Our concentration in this area has helped us hold insurance companies accountable when they have not complied with the law, bringing countless families the financial security that they need by obtaining death benefits that are rightfully theirs.

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.

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.

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 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!

When can an insurance company cancel a life insurance policy?

When taking out a life insurance policy, the policyholder aims to provide an extra layer of financial security and peace of mind for his or her loved ones. However, since insurers are incentivized to minimize risk, they will frequently look for reasons to cancel customers’ policies. This can jeopardize the policyholder’s supposed financial security and force him or her to evaluate other alternatives. Misrepresentations during the contestability period, nonpayment of premiums, and termination of employment are three of the most common reasons for which insurance companies may decide to cancel your policy.

The Contestability Period

The contestability period is defined as the amount of time during which an insurance company can review and fact-check information on a life insurance application. It is two years from the effective date of the policy in most states, although some (e.g. Missouri) limit it to one year. The contestability period is usually used as a means for denying claims after the insured’s death (see our blog post), but it can also be used in order to investigate and cancel existing high-risk policies.

If the policyholder left out any information on his or her policy application, such as a previous illness, medical condition, or hospital visit, the insurer has the right to investigate statements on the application and cancel coverage if something was left off. Unless there is reason to believe the application was fraudulent, the insurer has little motivation to do this while the policyholder is still alive and likely to live past the two-year contestability period.

Termination of Coverage/Lapse

The most common situation in which an existing life insurance policy may be cancelled is through nonpayment of premiums, i.e. when you don’t make one or more of your monthly payments (see our blog post for a more detailed explanation). Your coverage is unlikely to terminate if you send payment a few days late, as the vast majority of life insurance policies allow for a “grace period” of at least fifteen days. So long as the insurance company receives payment within the grace period, coverage will remain in place.

However, if the grace period expires, your coverage will lapse; in other words, your policy will be cancelled. In such a situation, you have to contact your life insurance company and meet specific conditions before reinstating your coverage. This often involves retroactively making up all missed premium payments.

Termination of Employment

Many people get their life insurance via so-called “group life insurance plans” through their employer. When you are no longer considered an active employee, your coverage will terminate along with your employment. This is often the case with workers who go on disability and are thus no longer considered “active.” Their coverage may terminate even though they are still technically employed.

In these situations, it may be prudent to request that your insurance provider convert your group policy to a privately owned, individual life insurance policy. This often requires paying high premiums and meeting certain provisions as determined by the company.

If your policy has been momentarily cancelled, you can always reinstate it or buy a new one. When the policyholder passes away before reinstating coverage, however, legal recourse may be the only option. If your loved one’s coverage was wrongfully terminated prior to his or her death, it’s best to contact an experienced life insurance lawyer to evaluate your case.

 

Was Your Life Insurance Claim Denied Due to Lapse?

If there was a lapse in coverage, your claim will be denied. But don’t take no for an answer!

Our life insurance attorneys have gotten many clients paid on lapsed policies. Lapse is one of the most common reasons a life insurance claim is denied, however, in many instances we can get the claim denial reversed if we show that the lapse was not the fault of the insured.

Contact us to speak with a life insurance claim lawyer about your claim and find out whether the life insurance company should pay your claim on the lapsed policy. We only take cases on a contingent basis, meaning we do not get paid unless you do, so you have nothing to lose.

How to Get Paid on a Lapsed Life Insurance Policy

Life insurance is a highly regulated industry. Life insurance companies must follow strict procedures when an insured’s premium is late or premiums have not been paid for some time, and the policy lapsed or was terminated. Sometimes they don’t.

The laws that control payment lapse or termination for non-payment of premiums are updated frequently, requiring life insurance companies to update their contracts and procedures. Often they fail to do so, or fail to do so in a timely fashion, and a policy will fall through the cracks.

Frequently, our life insurance lawyers have shown that the life insurance company failed to follow the law and improperly cancelled the life insurance policy. In the case of lapse of employer-provided group life insurance, our life insurance attorneys have shown that the administrator of the group life insurance plan failed to follow the law. In these cases, the beneficiary can be paid despite the lapse in coverage.

Our life insurance attorneys thoroughly investigate each case of lapse to determine whether the lapse was not the fault of the insured. Here are instances where we’ve gotten our clients paid on a lapsed insurance policy.

If the Policy Lapsed Because the Insured Did Not Receive Notice, the Beneficiary May Be Paid

If the insured never received notice of the lapse, or received inadequate notice under the law, you may get the death benefits paid under certain circumstances.

Case Study:  where the insured fell into a comatose state and the family never received notice that premiums were past due, only notice of lapse and termination, we were able to get the beneficiary paid.

If you are the beneficiary of a lapsed life insurance policy, you should obtain copies of any notices sent to the insured and contact our experienced life insurance lawyers to evaluate whether your claim can be paid despite the non-payment of premiums.

If the Insured Died During the Policy’s Grace Period, the Beneficiary May Be Paid

The policy documents will set forth the applicable grace period following non-payment of premiums. If the insured dies within this period, the policy is still in effect and the beneficiaries will be paid the death benefit.

In the case of death during the grace period, our life insurance lawyers can likely get your claim paid. We will need to know the date of death and the date of the insured’s last premium payment. We will also need any notices sent to the insured, if available.

If the Policy Lapsed Because the Insured’s Premium Payment was Lost or Delayed, the Beneficiary May Be Paid

If a premium payment was lost or delayed through no fault of the insured and the policy lapsed, the beneficiaries still may be paid.

This often happens when the insured is in the hospital or assisted living and no longer in control of their finances. In these cases, our life insurance attorneys will investigate whether the insured or the insured’s power of attorney received the required notices regarding non-payment.

If the Policy Lapsed Because the Insured’s Employer Mismanaged the Group Life Insurance Plan, the Beneficiary May Be Paid

Unfortunately, this is common. Because insurance law is complex and many employers attempt to administer their group life insurance plan lawfully but fail, policies lapse and are terminated through no fault of the insured. In these cases, the policy will pay out.

If you are the beneficiary of an employer-provided group life insurance policy, contact our life insurance lawyers for your free case evaluation. We will investigate and determine whether the employer failed to provide an application for conversion to private life insurance, failed to provide an application for life insurance premium waiver for disability, or failed to send the required notices, whether the employer stopped paying the premiums unlawfully.

If the Policy has a Non-Forfeiture Clause, the Beneficiary May Be Paid Despite Lapse

Some insurance policies include a non-forfeiture clause, which means that if the insured stopped paying premiums, their beneficiary will still receive some of the benefit.

You can think of this as a lapsed policy refund. If coverage lapses, the insurance company will refund part of the premium payments and/or pay the policy’s cash value.

With some policies, coverage will not lapse in case of non-payment. Instead, the policy will remain in place but with a reduced death benefit calculated as a percentage of the premiums that were paid.

What is Lapse in Life Insurance?

When someone buys a life insurance policy, the life insurance company’s obligation to pay out to their beneficiaries is contingent upon whether the insured paid their premiums. A lapse in coverage will occur if the insured fails to pay their premiums. If the policy lapses, the life insurance company will not pay the insured’s beneficiaries.

Call Our Life Insurance Lawyers if Your Claim Was Denied Due to Lapse

If your life insurance claim was denied due to a missed payment, reach out to the life insurance lawyers at Boonswang Law. We will determine whether you can be paid!

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