There are many reasons why a life insurance claim can be denied. One of those reasons is material misrepresentation on the application. Material misrepresentation is a legal term which means incorrectly answering questions on the enrollment form. Often, in order to get a lower premium on the life insurance policy, people answer questions that would make them seem healthier or less at risk. Other times, however, applicants forget and answer questions to the best of their ability without verifying information. Still sometimes insurance agents fill out applications for their clients. All of these scenarios may lead to a future claim denial.
Insurance companies will carefully look at the answers provided on the enrollment form and will match them with the insureds' medical records. If they see a discrepancy, they will most likely deny the claim. What beneficiaries need to know is that there is always a way to dispute such denial for a number of reasons. An experienced life insurance lawyer will help you sort these things out and get you the benefits to which you are entitled.
Two-Year Contestability Period
There is generally a two-year contestability period in a typical life insurance policy. This means that the insurance company can rescind the policy if it determines that there are omissions and misrepresentations on the insurance application and the policyholder dies during the first two years of the policy period. In this case the insurance company will deny life insurance claims, refuse to pay life insurance benefits and only return any premiums paid on the policy. After the two-year contestability period runs out the life insurance company usually cannot contest the policy regardless of problems in the application, and must pay the face amount of the policy upon the policyholder's death.
Bad Faith Insurance Practice
Often, insurance companies will try to use even minor discrepancies in the application for enrollment as the basis for denying a claim. It usually occurs during the two-year contestability period where there was incorrect medical history in the application. When this happens, our experienced life insurance attorneys will ask the following questions:
Who filled out the application?
Did the insurance company agent fill out the application?
Did the applicant have an opportunity to read the application?
Was the application filled out by a broker instead of an agent?
If the agent entered incorrect information on the application and the insured did not have an opportunity to correct it, or the agent assured the applicant that the application was properly completed, then the insurance company may still be legally required to pay policy benefits.
It is critical to conduct a proper analysis of specific facts and issues pertinent to a specific life insurance claim and policy. If your insurance company denied your valid life insurance claim you will need experienced life insurance attorneys to analyze your denied claim and advise you of any recourse you may have, including insurance bad faith litigation. Our life insurance attorneys are focused on these types of cases and fight aggressively for the benefits our clients are entitled to.