We had a client with a denied $250,000 life insurance claim from AIG. Our life insurance attorneys submitted a lengthy legal brief, and the claim was paid within two weeks.
When a life insurance policy claim was submitted to the insurance company but denied, the beneficiary is not left without recourse. A top life insurance lawyer can help. One of the most common reasons for denial is allegation that the policy was acquired under material misrepresentation. In this case, there are some common defenses that beneficiaries can assert to dispute the denial.
- First, they can claim that the misrepresentation was not material: Not every omission or misrepresentation in a life insurance application rises to the high level of being material. The insurance company has the burden to show that an omission or misrepresentation in the application, if it had been known, would have caused it to deny coverage or assess a higher premium rate. Not all facts or conditions inquired about in the application will meet this standard, nor will all personal and medical information that an applicant fails to disclose. Some will be minor or trivial because they have no impact on either the mortality risk or the amount of insurance offered.
- Second, beneficiaries can request to review underwriting guidelines and other materials: In a lawsuit, a life insurance company must produce documentation concerning its underwriting practices. It cannot rely on mere conclusions in order to disclaim coverage. Life insurance companies have detailed underwriting guidelines and other materials that rate or classify a whole array of medical conditions and financial information. A life insurance lawyer should know to demand this information during a lawsuit to verify if the reason for the claim denial is a valid one.
- Third, beneficiaries will look into whether other facts or conditions were ignored during the application process: It is important to discover if the life insurance company ignored certain health risks or personal information when issuing the policy, but stresses the importance of those not disclosed that it relies upon to justify the insurance denial. Such evidence may show that the denial is not objective and was motivated by the insurer's financial interests. In other words, it may show that the underwriting standards used during the application process are different than those used to investigate a death claim. This approach can be very effective in overturning a life insurance denial. If the life insurance company dismissed a condition as insignificant, and issued a policy at an incorrect and impermissible rate, a court is unlikely to believe that it would have correctly rated the undisclosed condition if it had been known. Life insurance companies will often ignore medical and financial facts in order to be competitive.
- Fourth, beneficiaries may assert the defense of waiver: Sometimes a life insurance company, when it issued the policy, had sufficient information to put it on notice of the fact or condition that it later alleges was not properly disclosed. In such a case, a life insurance attorney may be successful with a waiver defense.
- Finally, beneficiaries may claim that the misrepresentation was innocent, not intentional: Although the law varies from state to state, there are instances when a successful argument can be made that an omission or misrepresentation was not intentional. These may include situations where:
- The agent was at fault
- The insured had a disability
- The insured had a language barrier
- Lack of knowledge of a condition or its significance
Succeeding with these types of defenses may be very difficult. However, there are many cases where they will support overturning the denial of a policy. A skilled life insurance attorney can evaluate the application, policy, and underwriting guidelines to determine if a material misrepresentation was made or if the policy should rightfully be paid.