Articles Tagged with: Misrepresentation Denials

Can a Life Insurance Claim Be Denied Due to Drug Use?

The short answer is yes, a life insurance claim may be denied due to drug use, but you can fight it! Whether your denied claim for death benefits can be paid eventually will depend upon the factors explained in this article.

We have helped many beneficiaries across the nation get death benefits when the life insurance company initially denied their claims because illegal or prescription drugs were involved. If your life insurance claim was denied due to drug use or for any other reason, give us a call. We can help.

What If the Insurance Company Claims the Drug Overdose Was a Suicide?

Most life insurance policies are subject to the 2-year contestability period, during which life insurance companies can deny beneficiaries’ claims for a number of reasons, including when the evidence suggests that the insured committed suicide. This policy is in place to keep people who intend to commit suicide from taking out life insurance policies just before their death.

Group life insurance policies from one’s employer are governed under ERISA, and in recent years the federal courts have ruled in favor of life insurance beneficiaries when the insured died of a drug overdose, deeming that the death a payable accident. In the courts’ views, the insured intended to ingest the prescribed or illicit drug, but did not intend to fatally overdose, therefore the insured did not intend to commit suicide.

Whether this theory applies in non-ERISA policies is being determined now in states across the nation. As the most experienced life insurance attorneys, we often use these and other arguments to get our clients paid. 

Case Study #1

We got clients in Kansas paid when the insured died from a Fentanyl overdose. The autopsy report stated that the cause of death was “accidental.” The insured was prescribed Fentanyl patches and took them daily for several years, yet the life insurance claim was denied based on the drug use exclusion. Because the Fentynol was prescribed, and the overdose was deemed accidental, we were able to get our clients paid. 

Claims of Misrepresentations on the Life Insurance Application

If the insured used drugs and did not disclose that on their life insurance application and medical questionnaire, beneficiaries’ claims are denied due to the insured’s misrepresentation. This is the case whether the death of the insured was drug-related or not, and whether the insured died using drugs that were prescribed or illicit drugs.

Case Study #2

We recently got clients in Georgia paid when the insured, in response to the question “In the past three months, have you consulted a doctor or had treatment, medication, or diagnostic tests of any type?”  answered “Yes” and added, “Taking Nexium 40mg for Acid Reflux.” 

New York Life denied her beneficiaries’ claim due to alleged misrepresentations, asserting that the insured was diagnosed with dyspepsia, gastroesophageal reflux disease with esophagitis, gastritis, and helicobacter pylori, weight loss, was taking Nexium, Biaxin, Zantac, and Flagyl, and was recommended to have an upper endoscopy. 

We successfully argued that the life insurance company was on notice from day one that the insured had a condition that should be investigated further before writing a policy, but the insurer failed to do so, and so waived their defense of misrepresentation. 

What If the Cause of Death Was Unrelated to Drug Use?

If a toxicology report shows the insured took prescription drugs they did not disclose, or took illicit drugs triggering the policy’s drug exclusion, the insurance company will most likely deny claims for death benefits initially. However, if the cause of death had nothing to do with drugs, we may be able to get the beneficiary paid.

Case Study #3

The insured was in a motorcycle accident, sustained severe injuries, and was hospitalized with a DNR for one month until he died. His beneficiary’s claim was denied based on “acute amphetamine intoxication” and benzodiazepine use, both of which were indicated in the toxicity report. No autopsy was performed, and the medical examiner never viewed the body. 

We successfully argued that the insured did not die from an overdose but from injuries sustained in the accident, and we got our clients paid.

Case Study #4

The life insurance company denied our client beneficiaries’ claims due to misrepresentation on the part of the insured. However, the alleged misrepresentation was not material to the insured’s death, which was from natural causes. We got those clients paid, too. 

Drug Exclusions in the Rider

Most accidental death insurance policies include exemptions for death by drug overdose. The rub is that while death by prescription drug overdose is commonly deemed to be accidental, these insurance policy claims get denied. Even if the death certificate lists the cause of death as “accidental” when someone dies of a drug overdose, insurance companies will deny those claims. 

The insurance company will often use an autopsy report or toxicology report to determine whether a life insurance claim should be paid, but the mere presence of a drug in the insured’s system does not mean that the death was not accidental. Did the insured know they were taking a drug, or that the drug they took had a fatal interaction with another drug they take? Was the insured mistaken as to the dose? Was there perhaps medical malpractice in prescribing too large of a dose, or in prescribing a drug that could have fatal interaction with a drug the insured was already taking?

We investigate the death of the insured when the insurer uses drugs as an excuse to deny your claim for death benefits. We get to the truth!

What You’ll Need to Fight Your Life Insurance Claim Denial

If your claim for death benefits was denied due to alleged drug use, talk with us. When you have your no-cost, no-obligation consultation with us, we will tell you in advance what documents you should provide. They may include:

  • A copy of the life insurance policy
  • A toxicology report
  • An autopsy report
  • A death certificate
  • The names of any doctors seen by the insured
  • The name, dose, and date of any prescription drugs that the insured may have been taking.

We Fight Back When Life Insurance Companies Use Drug Use as an Excuse Not to Pay You

While we cannot guarantee the result of any case, and cannot promise the same results as the case studies in this article, we can promise you that your case will get the full attention that it deserves. We take beneficiary cases on contingency, meaning that we never get paid unless you do. If you retain us to fight on your behalf, know that we expect to win! Contact us immediately to talk about your death benefit claim denial.

What is “Material Misrepresentation” in Life Insurance?

Life Insurance Misrepresentation defined by a national life insurance beneficiary attorney.

Material misrepresentation is an untrue statement or omission that affects an insurer’s decision whether to issue a life insurance policy, and if issuing the policy, what premium the insured will pay. Usually the omission or untrue statement is meant to work in the insured’s favor, making the insured seem like less of a risk to the insurance company..

The two year period after the insurer issues a life insurance policy is called the “contestability period.” During the contestability period, the insurer has the right to rescind a life insurance policy if, after an investigation, it finds that the insured made a mistake or lied on the initial application and medical questionnaire. 

In virtually every state in the U.S., our attorneys have been very successful in getting clients’ claims paid when they were initially denied due to alleged misrepresentation on a life insurance application or medical questionnaire. Call us at 1-855-865-4335 to discuss your case. We don’t get paid unless you do!

What is Rescission in Life Insurance?

When insurers deny a beneficiary’s claim due to alleged misrepresentation on the part of the insured, they are exercising their right to “rescind” the policy, meaning, they never would have written the policy but for the insured’s untrue statement or omission. The policy is deemed void ab initio, which means it is treated as invalid from the outset.

When Can an Insurer Rescind a Life Insurance Policy?

An insurer can rescind a life insurance policy when the insurer can show any material misrepresentation on the part of the insured. The insurer’s burden of proof varies by state.

Some common defenses to an allegation of material misrepresentation are:

What if there was No Intent to Deceive on the Part of the Insured?

It depends where the insured took out the policy. Many states allow an insurer to rescind a life insurance policy and deny the claim even if there was no intent to deceive on the part of the insured. Those states do not differentiate between an honest mistake and a lie, and rescission can happen whether the death occurred within the contestability period or not.

Case Study: in South Carolina, a death benefit claim was denied for misrepresentation about COPD, however, the insured was never diagnosed with COPD.  South Carolina law requires proof that (1) the insured’s statement was false; (2) the falsity was known to the insured; (3) the falsity was material to the risk; (4) the falsity was made with the intent to defraud the insurer; (5) the false statement was relied on by the insurer. False answers made to the best of insured’s knowledge and belief does not satisfy the element of intent. We got our client beneficiary paid.

Case Study: in Illinois, an insured disclosed all medical information, including a hospital trip and follow up visits. The agent prepared the application. When the insured died, the insurer denied the claim for death benefits because the agent had neglected to record the insured’s disclosures completely. Under Illinois law, misrepresentation requires actual intent to defraud. Because the insurer cannot use fraudulent, careless, negligent, or mistaken actions of an agent to avoid payment, we got our client paid.

What if the Alleged Misrepresentation Had Nothing to Do with the Cause of Death?

In some states, an insurer will rescind the policy even if the alleged misrepresentation had nothing to do with the cause of death, even if the contestability period expired. We have gotten our beneficiary clients’ claims paid when the alleged misrepresentation was not “material” to the cause of death.

Case Study: in Kansas, an insured died of natural causes but the insurer tried to rescind the policy due to incorrectly-answered questions on the questionnaire. Under Kansas law, an insurer can only rescind a policy if it proves that the insured made an untrue statement or omission of material fact with the intent to deceive. In order for a misrepresentation to be material, it must have directly contributed to the insured’s death. Because the insured died due to natural causes, we got our beneficiary client paid.

Case Study: in Maryland, an insured and his fiance completed a life insurance application via agent with five people present and the insured was never asked about drug abuse. Insured was later murdered. An insurer has the burden to prove fraud and materiality of misrepresentation. Although the insured did not disclose drug use, he was not asked about it and did not receive medical treatment for it. Because the drug use was not material to the death and the insured was not asked about it, we got our client paid. 

Wondering if drug overdose is an accidental death covered by life insurance? It can be. Call us if your life insurance claim was denied because of drug overdose.

What if the Life Insurance Agent Made the Misrepresentation?

We have seen many, many cases where the agent or broker completed the application and medical questionnaire for the insured, and either made a mistake or intentionally omitted a fact.

In these cases, we have argued successfully that knowledge of the disputed fact is imputed to the insurer through the actions of its agent, and that there was no intent to deceive on the part of the insured.

Case Study: in Georgia, a life insurance agent completed the application for the insured indicating that the insured had no material medical history at all, although the insured was confined to a wheelchair and visibly had an amputation of lower extremities. Because actual knowledge of the agent’s incorrect statements in the application is imputed to the insurer, we got our beneficiary client paid.

Case Study: in New Mexico, an insured had cancer 15 years earlier and disclosed to the insurance agent that she visited an oncologist every six months. The agent did not disclose this on the application for life insurance. When the insured died, the insurer tried to rescind the policy due to misrepresentation, but we got our beneficiary client paid because information conveyed to the agent is imputed to the insurer.

Case Study: in Oklahoma, an employer switched the company’s group policy to another insurer, and the insured was asked only if she wanted the same coverage, which she did. After she died, the new insurer claimed misrepresentation because the insured did not disclose her full medical history. However, the new insurer did not require the insured to complete an updated medical questionnaire at the time. We got our client beneficiary paid.

Case Study: in New York, an applicant who was blind and had diabetes had an agent fill out the life insurance application. The agent marked “No” for both conditions. When the insured died, the insurer sought to rescind the policy for misrepresentation, but because the insured was blind she could not have seen the application. We got our beneficiary client paid.

When the Insured Would Have Paid More in Premiums but for the Alleged Misrepresentation. 

People who are older or who have existing medical conditions or previous surgeries will pay more in premiums because they present more of a risk of loss to an insurer. If a person lies about age or medical history on their application, the insurer will charge less in premiums but may have the right to rescind the policy if they discover the misrepresentation.

Case Study: the application listed the insured’s age as seven (7) years younger than he was. When he died, the insurer tried to rescind the policy due to misstatement of age. This policy was governed by Delaware law, and the solution was to settle for most of the death benefit amount by calculating what premiums the insured would have paid if the insurer knew his correct age, and subtracting that amount from the death benefit.

Ambiguous Questions on the Questionnaire Resulted in Misrepresentation.

If a question on a medical questionnaire is ambiguous, it and the insured’s response can be construed against the insured. Often a question will prompt an incomplete answer or an answer that puts the insurer on notice that there may be more to the story.

Case Study: In response to  “In the past 3 months, have you consulted a doctor or had treatment, medication or diagnostic tests of any type?” the insured answered “Yes.” Underneath the question, the insured added, “Taking Nexium 40mg for Acid Reflux.” When she passed, the insurer denied the beneficiary’s claim due to alleged misrepresentations, asserting that insured was diagnosed with dyspepsia, gastroesophageal reflux disease with esophagitis, gastritis and helicobacter pylori, weight loss, was taking Nexium, Biaxin, Zantac and Flagyl, and was recommended to have an upper endoscopy.

Under Georgia law, the existence of circumstances from which constructive knowledge of material information may be imputed to the insurer will estop the insurer from relying upon the falsity of such answers in seeking to avoid liability under the policy. The insured made no further inquiry, therefore it was no failure of the insured to disclose. Also, under Georgia law, courts have consistently found that compound questions to be answered with a “Yes” or “No” are ambiguous by law, and ambiguities are always be construed in favor of the insured.

Case Study: in New Hampshire, a family took out a life insurance policy. The application had room for five names, but only two doctor’s names, so it was unclear to the parents whether the medical questions applied to the children or not. Questions are ambiguous when there are two reasonable interpretations, and because ambiguous questions are interpreted in favor of the insured, we got our client paid.

Case Study: in Arizona, an agent prepared a life insurance application for an insured and her son. She only spoke Spanish, and several questions on the application were ambiguous in that it was not clear whether facts or an opinion regarding the son’s health were sought. The son later died. Because in Arizona an insurer must prove actual fraud to rescind a policy for misrepresentation, we got our client paid.

What if the Insured’s Answers Should Have Triggered Investigation by the Insurer?

In some states, an insurer has a duty to investigate if any answers on the insured’s application or medical questionnaire indicate there may be more to the story.

Case Study: in New Mexico, an agent completed an application for the insured and the insured stated that she reviewed the application and approved it. Although she did not disclose any medical conditions, that day she was using an oxygen tank and, in fact, had been diagnosed with congestive heart failure, atrial fibrillation, and diabetes. The agent failed to take note of this and his failure to disclose facts that may affect the insured’s interest makes him liable for the loss. The insurer has a duty to investigate when an applicant gives sufficient information to alert the insurer to a medical condition. Because the agent failed to warn the insurer of an observable health condition, the insurer could not rescind the policy and we got our client beneficiary paid.

If Your Claim Has Been Denied Due to Material Misrepresentation, Talk with us – our lawyers are among the Best Life Insurance Beneficiary Attorneys in the United States.As you have read, in many states beneficiaries can successfully defend against insurance companies’ allegations of material misrepresentation. Regardless of where you live or what state law controls, you need vigorous representation to get paid. Contact us for a free case evaluation.  You pay no fee unless we get you paid. 

Life Insurance Claim Denied Due to Alcohol Consumption?

Can the life insurance company deny your claim because the insured used alcohol? The short answer is yes, claims for death benefits are frequently denied unfairly when alcohol is involved.

Was your claim for death benefits denied because the insured used alcohol? Was the insured’s death from complications from alcohol abuse? Was the insured intoxicated when they died, but their death had nothing to do with alcohol use or abuse?

In many cases where the life insurance company denied beneficiaries’ claims due to the insured’s alcohol use, we can help you get your claim paid. Let the experienced life insurance beneficiary attorneys at Boonswang Law fight for you. There is no cost unless we win.

Why Insurance Companies Routinely Deny Life Insurance Claims Due to Alcohol Consumption.

Insurance companies make money for their shareholders when they deny life insurance claims. For this reason, they will grasp at any reason, however unlikely, to deny your claim initially.

Does Alcohol Affect Life Insurance?

Yes, alcohol consumption can affect whether a life insurance policy is paid, or whether an applicant for insurance can get coverage.  

If an insured discloses on their initial application for life insurance that they use alcohol, the insurance adjuster will take that into consideration when writing the policy. Life insurance companies often justify their life insurance claim denials by arguing that alcohol use can affect the amount in premiums an insured will pay, and may even result in denial of their application.

Will Life Insurance Pay Out for an Alcohol-Related Death?

In some cases, life insurance will pay out after the death of an insured who suffered from alcoholism. If the insured died of causes wholly unrelated to alcohol use or abuse, it is often possible for an attorney to get that life insurance claim paid.

What Can Be the Reasons for Rejection of a Death Claim Due to Alcohol?

Here are the types of death not covered by life insurance when alcohol is involved:

The Policy has an Alcohol Intoxication Exclusion

In about half of all states in the U.S., life insurance companies are permitted to add an exclusion to policies to exclude deaths directly or indirectly related to alcohol use from coverage. If the insured is intoxicated and dies for any reason, the insurance company will deny your claim under this exclusion.

Misrepresentation on the Initial Application and Medical Questionnaire

If the insured omits mention of alcohol use, or fails to disclose past or current alcoholism, and the death of the insured was in any way related to alcohol use, the insurer will likely deny your life insurance claim for death benefits because of alleged misrepresentation on the part of the insured.

We can sometimes resolve these claims for the amount of the death benefit minus the amount the insured would have paid in premiums had the underwriter known that the insured used alcohol.

The Insured Died During the Contestability Period

If the insured dies within two years of purchasing the policy, the insurer will grasp at any reason to deny your life insurance claim, even if that reason has absolutely nothing to do with the cause of death. 

For example, if the insured failed to disclose that they used alcohol socially, and then dies of something having nothing to do with alcohol use, such as mesothelioma, the insurer may allege that the insured misrepresented himself and deny your life insurance claim.

We are frequently able to get these claims paid, especially if the death was unrelated to alcohol use or abuse.

The Insured Died While Doing Something Illegal

If the insured died while doing something illegal – for example, drinking and driving – the insurer will deny your life insurance claim under the illegal act exclusion. If the insured had a few drinks at a friend’s dinner party, mistakenly trespassed on a neighbor’s yard on the way home, and was struck by a falling branch and killed, the insurer may use the few drinks to deny your life insurance claim.

Let the Life Insurance Beneficiary Attorneys at Boonswang Law Fight for You!

If your claim has been denied for an alcohol-related reason, do not give up! There are many circumstances under which we can get that claim paid or even negotiate a settlement for you.  Keep in mind that we take cases on a contingency basis, meaning that we do not get paid unless we win. Contact us for your free, no-obligation consultation. Let us help you fight the life insurance company.

Life Insurance Claim Denied Due to Smoking?

Unfortunately, one of the most common reasons insurance companies refuse to pay a life insurance claim is because the insured smoked, but did not disclose their past or current smoking habit on their initial life insurance application and medical questionnaire.

If your claim was denied due to smoking, we can help. Often it is a matter of showing that there was no fraudulent intent on the part of the insured, or that a past smoking habit had nothing to do with the insured’s cause of death. 

Don’t take no for an answer if payment was denied because the insured allegedly lied about smoking. The experienced life insurance lawyers at Boonswang Law have helped thousands of beneficiaries get paid when the insured was a smoker. Contact us for your free, no-obligation case evaluation. We don’t get paid unless we win, so let us help you.

Claim Denied Due to Death within the Contestability Period

The two-year period following the date of purchase of the life insurance policy is called the contestability period. During the contestability period, an insurer can deny beneficiaries’ claims for any mistake or omission they made on the initial life insurance application or medical questionnaire, even if the mistake or omission had nothing to do with the insured’s death.

For example, if the insured did not disclose that they had a smoking habit years ago, and quit, then died of injuries sustained in a car accident during the contestability period, the insurer can deny your claim. If the insured failed to disclose that they currently smoke, and was shot and killed in a hunting accident, the insurer can still deny your claim.

When the alleged misrepresentation is not “material” to the insured’s cause of death, we can often get your claim paid.

Claim Denied Due to Misrepresentation

If the insured died outside the contestability but the cause of death could be linked to undisclosed smoking, your life insurance claim will likely be denied due to misrepresentation. The reason insurers are permitted to deny such claims is that as a matter of public policy, people applying for life insurance should be dissuaded from lying about their health or lifestyle habits just to get a lower premium payment.

We have gotten many such claims paid because we can show that the insured did not act with fraudulent intent in failing to disclose smoking. We have also gotten claims paid when the insured’s smoking habit had nothing to do with the cause of death.

Case Study – If No Intent to Deceive, No Misrepresentation

Where an insured died of natural causes but the insurer denied the claim because questions on the initial application were not answered correctly, we were able to get that claim paid because those answers did not show that the insured acted with the intent to deceive, and the answers were not material to the insured’s cause of death.

Claim Denied Due to Agent Mistake or Negligence

It is all too common for an insurance agent to complete an application and medical questionnaire on behalf of the insured, to make a mistake that the insured does not find or know about, and then for the insurer to deny beneficiaries’ claims due to alleged misrepresentation on the part of the insured.

Case Study – Settling for the Death Benefits Minus the Increase in Premiums the Insured Would Have Paid.

An agent made a mistake that recorded the applicant’s age as seven years younger than he was. We were able to get our beneficiary client paid the death benefits minus the amount the insured would have paid in premiums had his age been recorded correctly. This same theory might apply to get you paid when the insured smoked, but did not disclose it on the application. 

Case Study – Agent Negligence or Mistake.

An insured disclosed to his agent that he used to smoke but quit a few months prior. His agent responded that the question about smoking did not apply because the insured had recently quit. The agent also did not record related information about the applicant’s COPD and Hepatitis C. The insured signed the application verbally and did not have a chance to proofread the agent’s work.

Although the insured died from smoking-related complications, the agent knew about past smoking and present related conditions yet did not record them. We got our client beneficiary paid because the insurance agent’s knowledge is imputed to the insurance company.

Don’t Take No For An Answer! We Can Help Get You Paid When the Insured Smoked

The life insurance beneficiary lawyers at Boonswang Law have dealt with thousands of claim denials over the years, and smoking has figured prominently among the reasons for denying a claim. What might seem like a cut-and-dried case of lying on the part of the insured may be an innocent mistake, a mistake or negligence by the insurance agent, or have nothing to do with the cause of death. In any case, we will find out and help you fight back. 

Have questions about life insurance claims being denied due to vaping or occasional cigar smoking? We can help you with that too.

Life Insurance Company Won’t Pay Claim? Here’s What to Do When Your Claim is Denied

Here’s an explanation of the most common reasons a life insurance company refuses to pay a claim, how you can prevent your beneficiaries’ claims from being denied, and what to do if the life insurance company denies your claim, from the noted life insurance lawyers at Boonswang Law.

Why Do Life Insurance Companies Deny Claims?

Life insurance companies seize any opportunity to deny claims because they only make money for their shareholders when they don’t pay out. This means that many, many claims are denied in bad faith, for the flimsiest of reasons.

5 Common Reasons for Life Insurance Claim Denials or Delays

Death During the Contestability Period

The two years after the day that the insured purchases a life insurance policy is called the contestability period. During the contestability period, the insurance company can deny a claim for death benefits due to any mistake or omission on the insured’s initial application and medical questionnaire, even if the mistake has nothing to do with the cause of death.

Suicide during the contestability period will also result in claim denial. This is to dissuade those contemplating suicide from taking out life insurance policies to benefit their loved ones, knowing they will die soon.

Misrepresentation on the Application or Medical Questionnaire

If the insured intentionally or mistakenly omits or misstates information of any kind during the contestability period, the insurer will deny your claim. This is also true if the omission or misstatement was made by an insurance agent preparing the insured’s application and medical questionnaire.

Insurance companies will also deny claims outside of the contestability period for alleged misrepresentation, whether or not the alleged misrepresentation had anything to do with the insured’s cause of death. These denials can frequently be overturned!

Death Excluded from Coverage

Common exclusions include:

  • Suicide (often if within 2 years of taking out the policy)
  • Death during an illegal act
  • Death by drug overdose
  • Death by alcohol poisoning
  • Death occurring while visiting a high-risk travel destination
  • Death due to an Act of War

Lapsed Policy Due to Non-Payment of Premiums

If a beneficiary is told that the claim is denied due to policy lapse or termination, the inquiry should not stop there. It is common for policies to lapse due to no fault of the insured. 

For example, if an employer fails to pay group life insurance premiums on the insured’s behalf and then fails to provide the required notices and conversion forms to the insured, the employer is at fault for the lapse in coverage and the claim can be paid.

If an insurance company cannot show that it sent the insured the required notices of impending lapse, the claim can be paid. If the insured was entitled to a waiver of premiums due to disability, but did not receive that waiver, the claim can be paid.

Beneficiary Dispute 

If the insured changed the beneficiary designation just before dying, or there is an allegation of fraud or undue influence related to a change of beneficiary, the insurer will not pay out until that is resolved.

If the insured is vague in the beneficiary designation, for example, designating “all my children” rather than naming each of the children, a beneficiary dispute may arise. Did he mean all of his children from all marriages? Did he intend to include children born outside of his marriages? Did he intend to include stepchildren? The insurer will not pay out until this is resolved.

If the insured’s named beneficiary cannot be found or has died, and there is no contingent beneficiary, the insurer will investigate and will eventually pay the death benefit to the insured’s estate.

How to Prevent Claim Rejection

An insured can take these three (3) steps to make sure their intended beneficiaries get the death benefit they’ve paid for.

  1. Disclose Medical History and Lifestyle Habits

The insured should disclose all past and current medical conditions, diseases, surgeries, and medication. The insured should also disclose all lifestyle habits, such as smoking and alcohol use. If the insured engages in any activities or hobbies considered dangerous by the insurer, the insured should disclose that as well.

If the insured hides any of these facts, they risk their beneficiary’s claim being denied for misrepresentation, especially if the insured dies within two years of purchasing the policy or the cause of death is related to the misrepresented fact.

  1. Proofread Application Prepared by Agent

Frequently, errors and omissions are the fault of an insurance agent who prepared the application and medical questionnaire on behalf of the insured. The insured should always proofread these documents carefully before signing them.

  1. Specify the Name of a Beneficiary and a Contingent Beneficiary

The most effective way to make sure the death benefit will pass to the intended parties is to specify primary and contingent beneficiaries by name. Do not name a minor child as a beneficiary, as this child cannot directly receive the death benefit and the court will appoint a receiver or trustee to manage the funds.

How Do I Deal with a Rejected Insurance Claim?

Contact the Insurance Company

Be sure to get the reason for denial in writing. Ask the claims agent if any additional information or documentation would overturn the denial. 

Contest the Denied Claim

By law, you must be given the forms to contest the claim denial. You must have reasons other than “the denial is wrong” or “the denial is unfair” to overturn the denial. 

Frequently, the reason for the claim denial seems iron-clad on its face, but the facts behind the reason show that there was no fault on the part of the insured. In those cases, the claim denial can be overturned entirely, or the life insurance company will settle for the death benefit amount minus what the insured would have paid in premiums.

When Does a Life Insurance Beneficiary Need an Attorney?

As soon as your claim is denied (or even if you think your claim is going to be denied), contact a life insurance beneficiary attorney. This will not cost you anything because beneficiary attorneys work on contingency, meaning they only get paid if they win. 

An experienced life insurance beneficiary attorney will investigate the facts behind the denial and the facts of the cause of death and will be able to uncover whether the policy legally lapsed, the insured was at fault for misrepresentation, or the death was indeed excluded from coverage. Often a claim that is initially denied is paid or settled once an attorney gets involved.

Let the Experienced Life Insurance Beneficiary Attorneys at Boonswang Law Help You Get Paid

Boonswang Law has helped thousands of beneficiaries just like you contest a claim denial and get paid. Contact us today for your free, no-obligation case evaluation. Remember, we don’t get paid unless you do!

Delayed Payout? Life Insurance Companies May Owe Interest

If a life insurance company is delaying payment of your claim, you may be owed interest.

When an insurance company denies or delays your claim, they can continue investing the proceeds and accruing interest that would otherwise be in your pocket. The insurer may owe you that interest under certain circumstances.

To find out if you are entitled to interest on your delayed life insurance payout, contact our life insurance beneficiary lawyers. We have over 25 years of experience getting clients paid and getting clients interest on their delayed payout. We can tell you if you are owed interest during your free, no-obligation case evaluation.

How Long Does it Take to Receive Life Insurance Death Benefits, Usually?

Wondering how long insurance companies take to process claims, or how long does it take for a life insurance company to pay out? An uncontested claim for death benefits, where the death of the insured does not require investigation, is usually paid within 30 days. Most states require life insurance companies to respond to a claim within thirty days, whether that response is approval, denial, or a request for more information.

Insurance companies are required to tell claimants which of the reasons life insurance won’t pay out. And when life insurance does not pay promptly, you have a right to know why.

How Can a Beneficiary Get Interest on a Delayed Life Insurance Payout?

If an insurance company unreasonably delays its response to your claim for death benefits, you may be entitled to interest. Whether you are owed interest on life insurance death benefits depends upon the terms of the policy and the jurisdiction governing the policy. 

Some life insurance policies include a provision that entitles a beneficiary to interest after a specified delay in payout.

Many states have enacted statutes that grant interest to a beneficiary of a life insurance policy when an insurer unreasonably delays a claim determination. For example, this Iowa statute explains the circumstances that allow a beneficiary to collect interest and the rate at which the interest is calculated.

Some delays in payment of the death benefit are considered inherently unreasonable, including:

Delay in Life Insurance Payment after Claim has Been Approved

Occasionally, an insurer or a company’s agent will tell a beneficiary that a claim has been approved, but the insurer delays sending payment. The longer an insurer retains the funds, the longer an insurer is able to continue investing those proceeds and reaping the profits for its shareholders. Under these circumstances, a beneficiary may be entitled to interest.

Delay in Payment of Claim Because Life Insurance Company Does not Contact the Beneficiary

Frequently an insurance company has reason to know that an insured died but fails to reach out to the beneficiary of the life insurance policy. Often a beneficiary is unaware that they are named in a policy or that a life insurance policy even exists.

If an insurer has reason to know that an insured has died, for example, because they use the Social Security Death Master File to identify policyholders who have died, that insurer should notify the beneficiary promptly.

Recently, several states have brought lawsuits against insurance companies that knew of policyholder deaths but failed to notify beneficiaries, retaining the death benefits and the interest accruing on them instead. Under these circumstances, a beneficiary may be entitled to interest due to the unreasonable delay.

Why Would a Life Insurance Payout Be Delayed?

Payout may be delayed six to twelve months or longer if the insurance company must investigate because:

If you are a beneficiary to a life insurance policy and you’ve submitted your claim and all required paperwork but haven’t been paid, know that the insurance company has no incentive to pay you quickly. In fact, any delay means your payout is accruing interest and benefitting the insurance company’s shareholders.

In the past there were many examples of life insurance companies not paying claims without delay. Fortunately, laws have been enacted to incentivize insurers to pay life insurance claims promptly, and if they do not, they may have to pay you interest.

How Long Does a Life Insurance Investigation Take?

What is the typical timeline for insurance companies to investigate claims? It varies, depending upon the circumstances of the death. Beneficiaries should be sure to respond promptly to all information and documentation requests from the life insurance company.

After the insured has died, beneficiaries of the life insurance policy file a claim with the insurance company and include a copy of the death certificate with their claim, keeping at least one original death certificate for their records in the event that the life insurance company misplaces the one sent to them.

When the insurance company receives the claim form and a certified copy of the death certificate, insurers have 30 days to deny the claim, pay the claim, or ask for more information.

In some situations, insurers will need to investigate a claim and the payout will exceed 30 days. Depending on the terms of the insurance policy and the laws that govern the policy, sometimes a beneficiary will be entitled to interest that has accrued during the delay of payment.

If your claim has been pending for more than thirty days, whether you have heard from the life insurance company or not, contact our experienced life insurance beneficiary attorneys. We help beneficiaries nationwide get paid with interest when their claim has been unreasonably delayed. 

When Will Life Insurance Companies Investigate Claims?

In most cases, an insurer will either deny a claim or pay a claim within 30 days. When there is a delay in life insurance payout instead of denying or approving, it may mean that an insurer requires more time to investigate the claim. Delays will likely occur in the following situations:

Delay in Life Insurance Payout When the Insured Died by Homicide. 

When an insured is murdered, the insurance company often waits to pay any benefits until the investigation is completed. Depending on the type of policy in question (term life, whole life, or AD&D insurance), the insurance company may need to know whether the beneficiary is associated with the murder or whether the insured was engaged in a felony at the time of his or her death

Delay in Life Insurance Payout When the Insured Died in a Foreign Country.

If the insured dies while abroad, an insurance company may take longer to investigate the circumstances of the death.

Insurers always require proof of death when a claim is made. In the U.S., a death certificate is acceptable proof of death. However, customary practices, records, and technologies vary across countries and continents, and a foreign death certificate may not satisfy the insurance company. Also, to ensure a claim for overseas death is not fraudulent, an insurance company may attempt to confirm the circumstances of the insured’s death independently. Depending on where the insured died, this may extend the investigation period significantly.

Delay in Life Insurance Payout When there is a Beneficiary Dispute.

If the insurance company is notified that multiple parties might have a claim to life insurance proceeds, it will postpone paying the benefit until a rightful beneficiary is established. Often, the insurance company will not make this determination itself. The insurer may file a life insurance interpleader action, and a court will decide the lawful beneficiary.

Case Study #1: the insurance company delayed paying for over two years because the insured had a girlfriend and child and neither was named in his policy. Luckily for our client, Illinois law prevents such improper claim practices and unreasonable or vexatious delay in paying claims, and we were able to get our client paid.

Delay in Life Insurance Payout When the Insured Died Within the Contestability Period.

The contestability period lasts for two years. During this time, an insurer is authorized to investigate to look for evidence of fraud and misrepresentation in life insurance application and medical questionnaire. If the insured dies within this two-year period, a payout of benefits may be delayed while the insurer examines medical records, financial records, or other relevant evidence.

Delay in Life Insurance Payout When the Insurance Company Makes an Administrative Error.

Case Study #2: payment of our client’s claim for death benefits was delayed because the insurance company never received medical records from a doctor that the insured never visited.  

If your claim is denied, please get all the details you can about the reason for the denial: it may be something as simple as a mistake such as this preventing you from getting your life insurance payout.

Delay in Life Insurance Payout When the Insured Never Received Notice of Lapse or Termination.

Case Study #3: Our client’s claim was denied because the policy lapsed and terminated due to non-payment of premiums. We investigated and found that the insured never received the statutorily-required notices. We got our client paid.

What Can a Lawyer Do if a Life Insurance Payout is Delayed?

An experienced life insurance lawyer will be able to tell you whether the delay can be turned into approval and whether you are entitled to interest for the time of the delay. Do not rely on an insurance company to tell you that you are entitled to interest – they have no incentive to do so.

Our life insurance attorneys can demand and obtain the full death benefits you are legally entitled to. Again, your right to interest depends on the jurisdiction in which the policy was issued and the terms of the policy itself, and we help beneficiaries get paid in jurisdictions across the nation.

For more information about your rights to interest on a delayed payout of benefits, contact a trusted life insurance attorney at the Boonswang Law Firm with your questions. Your initial case evaluation is free of charge, and if we take your case, know that we don’t get paid unless you do.

What happens when there is false information on a life insurance application?

What to do when an applicant for an individual health policy failed to complete the application properly

What happens when a life insurance application contains bad information? Wrong or false information can invalidate a life insurance policy. An insurance company can contest a life insurance contract due to application fraud.  Even when a mistake is unintentional, any misrepresentation or omission on a life insurance application can make it difficult for your beneficiary to recover the death benefits you want them to receive.

When applying for life insurance, be as thorough and accurate as possible on your application. Accuracy will help ensure that your beneficiary will recover the benefits for which you are paying. And if your application is prepared by your life insurance agent, review it carefully before signing.  If your application contains misrepresentation of material facts due to your agent’s negligence, that can also result in your claim being denied. Also, agent lies can void the policy. Review the application carefully before signing it and submitting it to the insurance company.

What happens if you lie on your life insurance policy application?

Your beneficiaries will likely have trouble getting their claims paid. Any misrepresentation on a life insurance application, whether intentional or unintentional, by you or by your agent puts the life insurance benefit at risk.

I am a beneficiary – Can I claim death benefits if information on the life insurance application was wrong?

Yes, you should always submit a claim for benefits. If you are a beneficiary, how are you to know that your loved one’s application contained a misstatement before your claim is denied?

If you have already submitted a claim and got your life insurance claim denied, you may still be able to recover with the help of an experienced life insurance lawyer at the Boonswang Law Firm. Take a look at some of the following examples of wrong information on the application – in our case studies, you will see that our client’s claim was initially denied, then we got our client paid. While these are all real-life situations, keep in mind that we cannot guarantee that the result of your matter will be the same.

Wrong Age on Application

An application with an incorrect age can make it difficult to recover benefits.  Many insurance policies contain a “misstatement of age provision”. A misstatement of age clause states that the insurance company will only pay the amount of benefits that would have been purchased for the premium if the correct age had been provided.

In other words, a beneficiary’s claim will pay out the amount of money that it would have paid out if your loved one’s age was accurate. This payout will certainly be less than expected under the current policy.

Even if the misstatement was accidental, an insurance company is likely to reduce benefits to match the true age of the insured. Insurers also reduce benefits if someone other than the insured (such as the agent) is to blame for the misstatement.

Case Study #1: Having interviewed the insured and the insured having answered all questions honestly, the insurance agent prepared an application and the insured signed it without reviewing it. It set forth her age as 10 years younger than she said it was. Because the agent prepared the application, the agent’s knowledge was imputed to the company and no fraudulent intent could be shown of the insured.  We got our client’s claim paid.

Inaccurate Income Listed

When applying for life insurance, applicants may be tempted to stretch the truth in their favor. Lying on a life insurance application is always risky:  in most states, an insurer can deny a claim even if the misrepresentation and the cause of death are completely unrelated.

Overstating your income, or even estimating your income, will increase the risk that a claim is denied — even if the insured never missed a premium payment. If your claim is underpaid or denied because of inaccurate income, you will likely require an experienced law firm like Boonswang Law to help you recover.

Inaccurate Weight Listed

Insurance companies rely on weight to decide your rate class and premiums.  Because weight is an important factor for all insurance companies, an inaccurate weight will increase the chance that your claim will be delayed or denied.  Insurance companies will always know if you or your loved one’s weight is inaccurate. Insurers receive an accurate report from your life insurance medical exam, and may even look at your health history to verify your weight.

Life insurance height and weight charts are available online to understand what category into which an individual is likely to fall based on their BMI.  Obese individuals are still eligible for life insurance and are likely to find coverage that meets their needs without sacrificing accuracy on an application.

Case study #2: Our client’s claim was denied for alleged incorrectly-answered questions on the insured life insurance application. An insurer can only rescind a policy if it can show that an untrue statement or omission of material fact was made with the intent to deceive, and that the misrepresentation regarded the cause of death. This insurer could show neither, so we were able to get our client paid.

Missing Information on Insurance Application        

When an applicant for an individual health policy fails to complete the application properly, insurance companies are more likely to increase premiums, reduce benefit payments, or deny benefits outright. The same happens if and agent fills an application out incorrectly.

Case Study #3: The insured disclosed that she was taking Nexium 40mg for acid reflux. Her beneficiary’s email was denied because of alleged material misrepresentation in that the insured failed to disclose that she was diagnosed with dyspepsia, gastroesophageal reflux disease with esophagitis, and related afflictions. Under Georgia law, the insurance company was on “constructive notice” that the insured was more seriously ill and should have inquired further when the application was received.  We got the beneficiary paid!

Application omissions are particularly risky if an insurer discovers an omission within the two-year contestability period.  If the insured dies within two (2) years of policy approval, an insurer can avoid paying benefits if it can prove that the cause of death conflicts with the approved application.  Even when the contestability period has passed, an insurer may still avoid payment by showing that the applicant misrepresented an aspect of his or her health that may have affected approval.  For example, if the insured dies of a heart attack within the contestability period, the insurer may deny benefits if the insured failed to report a history of high cholesterol on the application.

The Life Insurance Agent Was Negligent or Purposefully Lied on the Application

This happens! Read on for some real-life Case Studies about our clients.

Case study#4: The insured disclosed her heart complications and recent hospitalization to her insurance agent, who in turn neglected to disclose that on her life insurance application. Beneficiary’s claim denied. Because the agent’s knowledge is imputed to the life insurance company, we got the beneficiary’s claim paid.

Case study #5: The insured told his insurance agent that while he used to smoke, he quit a few months ago. The agent marked the question about smoking “no” and did not record that the insured had COPD and Hepatitis C. Claim denied. Again, the agent’s knowledge was imputed to the insurance company and we got the beneficiary’s claim paid.

Case study #6: The insured disclosed high blood pressure and hypertension to the insurance agent but the agent did not record the hypertension on the application. Again, the agent’s knowledge was imputed to company. Failure to disclose a material fact on an application is grounds for voiding the insurance contract only if fraudulent. Because the company could not show that the insured’s intent was fraudulent, we got the claim denial overturned and our client was paid.

Case study #7: The agent filled out the life insurance application for the insured, who was blind and had diabetes.  The agent failed to disclose these on the application, however, and the insured signed it. Because the insured could not see the application, no fraudulent intent could be proven. We got our client’s claim paid.

Life Insurance Lawyers Recover for Misrepresentation on Application

If you believe that you or a loved one may have inaccurate information on an application for life insurance, you should contact the insurance company immediately to submit an amended application. You don’t want the beneficiary’s claim denied due to life insurance application mistake.

A life insurance company normally has 2 years to contest information on an application. If you are a beneficiary and have already been denied benefits based on an alleged misrepresentation or fraud regarding the information on the application, contact the Boonswang Law Firm to discuss the steps that we can take together to ensure you get paid.

Bad faith in life insurance policies

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

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

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

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

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

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!

Misrepresentations and cause of death in life insurance applications

Can Life Insurance Companies Deny a Claim?

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

Insurance companies will frequently deny benefits to claimants due to misrepresentations during the policy’s contestability period (see our previous blog post).

The Laws Governing Insurance Vary From State to State

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

An Insurer Must Prove “Intent to Deceive”

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

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

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

What is Material Misrepresentation on an Insurance Application?

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

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

Misrepresentation Must be Relevant to Cause of Death

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

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

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

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

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

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

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

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