Life Insurance Lawyer Alabama
Whether you reside in: Decatur; Dothan; Hoover; Tuscaloosa; Huntsville; Mobile; Montgomery or Birmingham, our life insurance attorneys who live and work here in Alabama are here to help resolve your delayed or denied life insurance claim.
Tell the truth in your life insurance application
Your insurance company may still claim that you lied but the truth always prevails
Anyone who has been in and around the insurance industry knows a universal truth – insurance companies are in business to generate massive profits and they will stop at nothing to make that happen. This is particularly true with life insurance companies. So long as they can collect premiums and deny claims, their profits go through the roof.
One of the ways life insurance companies justify claim denials is to assert that the policyholder lied in his insurance application. Specifically, if they can unearth a lie after the policyholder passes away, then claim that they never would have issued the policy if they’d known the truth, they can often avoid paying claims for death benefits.
They get away with this based on a legal principle known as “material misrepresentation.” In essence, the law of material misrepresentation says that if two parties are negotiating a contract, one party lies during negotiations about something that is important to the contractual relationship, and the other party relies on that mistruth in entering the contract, then the person who relied to his detriment can avoid his contractual obligations altogether.
Life insurance companies have built their business processes around the concept of eliciting material representations that they can later use to justify claim denials. Specifically, they use long, detailed health questionnaires during the application process. These forms ask for excruciating levels of detail. Indeed, some life insurers require annual updates to the forms just to provide policyholders with additional opportunities to trip up.
Such was the case for one man living in Connecticut. Because the details of his situation are so indicative of the games life insurers play with material misrepresentations, we’ll examine his case in depth within this article.
Sometimes you just don’t know
In 2008, a 48 year-old, healthy Connecticut man named John sought to obtain a life insurance policy. John was rather wealthy and therefore sought a $10 million policy naming his wife, Catherine, as the sole beneficiary. He wanted to make sure Catherine would be comfortable should anything happen to hasten his death.
As part of the application process, John was required to fill out a lengthy health questionnaire. At the top and the bottom of the questionnaire, the following language appeared in bold type:
By submitting and signing this questionnaire, I warrant and represent that all of my answers are true and correct to the best of my knowledge. I understand that my insurance company will rely on my answers in determining whether I am eligible for coverage and, if so, in determining my premium.
John filled out the questionnaire over a period of several hours. At one point, he got to a question that read, “Have you been to an ear, nose, and throat doctor within the past two years?” John answered “No,” which was true at the time. What he did not reveal is that he had an appointment later that week with an ear, nose, and throat specialist to try to figure out why he had been experiencing vertigo.
John’s application was reviewed and he was approved for a $10 million policy, with the caveat that he would be required to resubmit a health questionnaire each year that the policy remained in effect. During the first year, John’s vertigo only got worse. He ended up seeing his ear, nose, and throat doctor several times, and had several medical tests related to his condition.
When it came time to fill out his first annual health questionnaire, John again came to the question regarding ear, nose, and throat doctors. This time, he answered affirmatively that he had seen the specialist in the past 12 months. When the questionnaire then asked if he had received a diagnosis from that physician, John answered “No.” Technically, that wasn’t a lie. John did not have a final diagnosis at that time, though his doctor had shared the suspicion that John was suffering from a brain tumor.
Indeed, later tests would confirm that John did have a brain tumor. John died from that condition prior to entering into his second policy term. John’s wife submitted a claim to his life insurance company. After a period of review, they denied the claim outright.
Did John make material misrepresentations?
Following its own investigation, the insurance company decided that John had made material misrepresentations in his insurance application. Specifically, the company claimed that John should have revealed in the initial questionnaire that he had an appointment scheduled with a specialist. Furthermore, the insurer claimed John was untruthful when he claimed in his first annual health questionnaire that he did not have a diagnosis. The company claimed they never would have continued his policy if they had known the suspicions about the brain tumor.
John’s wife was devastated. Fortunately, she contacted an attorney who specializes in the denial of life insurance claims. Together, they were able to piece together evidence showing that John had not technically made any false statements in his health questionnaires. They took the life insurance company to court and prevailed against its material misrepresentation defense.
In deciding the case, the court did note that it was an incredibly close call. While the judge agreed that John hadn’t technically lied, he struggled with the idea that John possessed information that probably should have been disclosed to the insurer. Because the insurance company did not specifically ask for it, however, the judge he had no choice but to award John’s wife the $10 million in policy proceeds.
John’s case is not unusual. Life insurance companies rely on alleged material misrepresentations all the time in denying claims. As attorneys who specialize in contesting such denials, we know how to build a case that will overcome denials on this basis. If you or a loved one have recently had a life insurance claim denied, please call us. We’re here to help.
- Number one is a misrepresentation on the application. This typically involves failing to disclose a medical condition. However, we can get over this hurdle the majority of the time.
- A lapse of a life insurance policy is probably second most common. What happens is that the insured gets sick and misses a payment or two. These are tough, but often we can get these claims paid.
- Probably third is the type of death exclusion. This could be a suicide or it could be a self-inflicted injury. Murder is another exclusion. Health again can fall under this exclusion. We often win suicide exclusions as we cite case law that the death was actually accidental.
- A very common exclusion is the alcohol exclusion. The insured may have been killed in a car crash, but the autopsy revealed alcohol in the person’s system. We have many legal briefs to combat this exclusion.
- Heroin and opiates or illegal drug exclusion is one of the biggest now. With the opioid crisis, there are tens of thousands of deaths.
- Prescription drug overdose exclusion may involve an overdose of medicine or taken medicines that are contraindicated.
- An ex-spouse being cut off from life insurance benefits is a big one. We actually have a half dozen ways to get over this hurdle.
- Having a spouse not listed as a beneficiary is another reason for denial
- Having a child not listed as a beneficiary is one too.
- Having only a primary beneficiary who is deceased is another.
- On an AD&D (accidental death and dismemberment) life insurance policy, a fall not being considered an accident is extremely common.
- The insured’s age not being correct on the initial application is a reason for denial.
- Having the wrong social security number listed is common.
- An autoerotic asphyxiation exclusion is an easy one for us to beat.
- An omission on the application is a big reason for denying a life insurance claim, but we have legal briefs to this effect.
- Not providing the required documents to the insurance company after death is a reason.
- Information which is argued to not be correct is one.
- When there is a dispute between two or more beneficiaries, an interpleader may occur, and we always get these resolved quickly.
- A beneficiary not named is a reason for not paying it out.
- A life insurance policy may be transferred from one company to another by the employer which causes major problems.