Help After a Life Insurance Claim Denial
Law Firm with Claremont & Pasadena Office Locations
Life insurance is an important part of a family’s financial plan. Families and individuals buy life insurance policies to protect family members and beneficiaries in the event of an unexpected and unfortunate death of a loved one. Families and beneficiaries count on life insurance providers to honor their promise to pay a life insurance claim. This helps the surviving beneficiaries and family members meet their financial needs. If the insurance company delays, denies or underpays a life insurance claim, the policyholder’s beneficiaries suffer.
Losing a loved one is a horrific and extremely stressful situation for families. It is worse when an insurance company fails to pay the life insurance policy benefits. But this happens far too often. Over $1 billion in life insurance payouts are disputed each year. Insurance companies use many reasons for denying or delaying a claim including:
- Misrepresentation – there was a misrepresentation on the application.
- Divorce – there was a divorce involving the policyholder or beneficiary.
- Missed premium – the policy lapsed because of a missed premium.
- Death circumstances – the circumstance of death was not covered (suicide, excluded illness)
- Unavailable documentation – required documentation has not been received (statements, death certificates, medical reports, etc.)
- Many more excuses – there are many other excuses that insurance companies use to deny, delay or underpay claims.
The law gets complicated quickly and trying to fight a large insurance company without a lawyer is very difficult. We know the law. The Law Offices of Scott Glovsky has been filing cases against insurance companies since 1999. We have beaten the largest insurance companies in California in trial.
Your Rights When A Life Insurance Claim Is Denied
California law requires an insurance company to act in “good faith” when processing a life insurance claim. The insurance company cannot deny your claim without a good – and legitimate- reason for doing so. If an insurance company violates the law, it can face severe penalties.
Generally, an insurance company must have policies and procedures in place to review and pay claims. It must investigate claims, determine coverage and pay proper values. It must follow applicable laws and regulations. When it violates one or more of these, it may be acting in bad faith.
What is Life Insurance Bad Faith?
If your life insurance was purchased on your own, rather than under your employer-sponsored policy, ERISA does not apply but there are separate contract law principles that govern insurance bad faith. Every insurance contract has an implicit promise of good faith and fair dealing. When a life insurance company fails to meet its duties without acceptable cause, it may be acting in bad faith. If a life insurance company acts in bad faith, you may have access to the normal proceeds of the life insurance policy, as well as additional recovery, including emotional distress damages, as well as punitive damages. Some of the ways a life insurance company may act in bad faith include:
- The insurer is attempting to rescind the life insurance policy without proper cause. Most life insurance policies have a two-year incontestability clause. This means that once the policy has been in force for two years, it can only be rescinded when there were material misrepresentations made on the application, or for non-payment of the life insurance policy premiums. If the insurer is investigating whether there were misrepresentations made on the application only to avoid paying the life insurance beneficiary, it could be acting in bad faith.
- The insurer is unreasonably delaying paying the life insurance claim. While the insurer may request additional records, it must balance competing objectives, and the requests must be reasonable and timely. “Reasonableness” revolves around whether there is a genuine dispute, and the insurer must reach its position in good faith.
- The insurer is claiming the policy lapsed. In some cases, during the last months of an insured’s life, he or she may be very ill, therefore, could forget to pay the monthly premium. In most states, this would be sufficient to deny the claim, but in California, a statute was enacted that protects those insured from such a situation. The insurer is required to adhere to notice and grace periods before a policy can be canceled for non-payment. If the insurer does not follow these rules, it can be forced to pay the life insurance proceeds.
- The insurer misrepresented policy provisions. If requirements for coverage are not clearly outlined in the life insurance policy, there may be a good claim for bad faith. Whether the agent was the culprit, or the language of the policy is deliberately vague, bad faith may have occurred.
- The insurer is improperly relying on policy exclusions. While there are always certain exclusions in a life insurance policy when these exclusions are worded in such a way that the insurer is “hedging its bets” to try and exclude as many scenarios as possible—and avoid paying a claim—if the insurer does not conduct a full investigation of the death claim before concluding the cause of the death is an exclusion, it could be operating in bad faith.
What is Life Insurance Incontestability?
Most life insurance policies contain an incontestability clause, which is a provision that prevents the insurer from canceling the life insurance policy based on misstatements after the insurance had been in effect for a special length of time. This length of time is usually two years but can be different. Most states require that an incontestability clause be included in all life insurance policies.
The wording in an incontestability clause usually states that no “misstatements,” other than deliberately fraudulent misstatements, can be used by the insurer to void the policy. So, if you are aware that you have a fatal illness, and you have been treated for that illness with no benefits, yet you state you are perfectly healthy in your life insurance application, this could be considered a deliberately fraudulent misstatement.
If, however, you were unaware of your illness at the time you applied for life insurance, even if the disease is genetic, then you cannot be accused of deliberately making a fraudulent statement, therefore the claim cannot be denied. Further, since the insurer did not find this fact within the first two years after the policy was purchased, it will be required to pay the benefits.
Since life insurance rates are based on your age, if you misstated your age on your life insurance application, the insurer could be able to deny the claim. If, however, the insurer investigated but did not find the mistake within the first two years, a life insurance denial attorney may be able to force the insurer to pay the claim.
What Can I Do if the Life Insurance Company is Delaying or Denying Payment?
Generally speaking, once a beneficiary files a claim for payment on life insurance, it should take between a few weeks and a few months to receive those benefits. If the wrong forms were sent in, or the cause of death is uncertain and the insurer is investigating the claim, it could take a bit longer. The insurer is not allowed, however, to deliberately delay a life insurance claim. If the insurer flat-out refuses to pay the claim, it is important that you speak to a knowledgeable life insurance denial attorney as quickly as possible.
Perhaps the policyholder died within two years of taking out the life insurance and the insurer is reviewing the medical history to ensure all health conditions were properly disclosed at the time of the application. The insurer may also be looking to see whether the insured engaged in any sort of risky behaviors—like skydiving—that they failed to report on their application. Perhaps the applicant was a long-time smoker yet claimed to be a non-smoker on their application.
If it is within the two-year contestability period, the insurer has the right to check out whether the application was filled out truthfully and fully. The insurer may also be checking to see whether the death was due to suicide, which is generally an accepted exclusion for life insurance companies. If your life insurance claim has been denied or unreasonably delayed, attorney Scott Glovsky can help you get the benefits your loved one intended you to have. Insurers must follow certain protocols and when they are breaking the law by delaying your payout, Scott Glovsky will fight for you.
How Life Insurance Denial Attorneys Can Help You
Fighting an insurance company can be a daunting challenge. There are often specific laws and procedures that must be followed to preserve and maximize your rights. Communicating with a life insurance company without a lawyer may result in information that does not maximize your claim.
We have extensive experience fighting insurance company claim denials. We know how insurance companies use interpretations of generalized policy language to deny claims. We know how they use broad exclusions to deny life insurance claims such as claiming certain deaths are suicide or caused by an excluded illness.
When an insurance company denies your life insurance claim for bad reasons, you may have a bad faith insurance case. We are experienced in insurance law, benefits issues, and challenging denied claims. This helps us uncover unscrupulous behavior such as improperly denying life insurance claims without adequate reasons and claiming that people died as a result of an excluded condition.
We represent policyholders and their beneficiaries in lawsuits for benefits and proceeds of life insurance and accidental death and dismemberment policies. We ensure that you get the insurance benefits that you or your loved one paid for. Call us today if your insurance company has denied your life insurance claim or you believe you’ve been underpaid. Consultations are free and we charge no fee unless you recover.
We Take Non-ERISA Cases
Individuals may be subject to a law called ERISA (Employee Retirement Income Security). We focus on non-ERISA cases. Call us and we can help determine if your case falls under ERISA or not. Generally, non-ERISA policyholders fall into the categories below:
You’re a Government Employee
- Employees of government entities – local, county, city, state, or federal
Individually Obtained Insurance Policy
- You purchased your own insurance as an individual, not part of any business
You Work For a Religious Organization
- Employees of religious organizations
You’re a Business Owner – And Your Policy Covers no Employees Other Than the Business Owners
- Individually issued to an owner of business where no other employee is insured under the policy
Contact a California Life Insurance Claim Denial and Dispute Attorney
If your life insurance claim is denied, you need legal representation. For a free consultation, call us at (626) 243-5598 or send us an inquiry form by clicking here or completing the form on the right side of this page. We want to help.