Life Insurance Claim Denied
You should immediately retain a life insurance lawyer when you have a denied life insurance claim.
Denied Life Insurance Claims Settled 2022
- Unified life intoxication exclusion problem $33,000.00
- American Chambers COVID 19 denial $65,000.00
- NEA life self-inflicted injury or suicide denial $103,600.00
- Woodmen material misrepresentation claim $50,000.00
- Sec Mutual Life coronavirus death claim $101,000.00
- PHP Life contestable period health issue $94,000.00
- Accordia high blood pressure not disclosed $22,000.00
- Kansas City Life sickness exclusion won $10,000.00
- Mid Continental act of war exclusion resolved $53,000.00
- Family First prescription drug mix issue $39,000.00
- Union Fidelity accidental suicide exclusion $105,000.00
- SB Mutual self asphyxiation contested policy $56,000.00
- Crump beneficiary designation disputed by wife $25,000.00
What are a few common reasons for a life insurance claim being denied?
- Insurance companies love to claim that there was some misrepresentation on the application. We have always recovered the full policy amount on every claim that we have handled.
- Not having the proper documentation or records is a common reason for denial. The majority of the time, the insurance company already has this information, and they are just trying to get you to give up on your good claim.
- A high blood alcohol content in the deceased's body. We have top experts that contest the collection and testing methods, and we have never lost this type of denial.
- Suicide or self-inflicted injury is another reason for denial. Unless there was a suicide note, our firm always prevails on these denials.
- A death that was accidental is often claimed not to be accidental. For instance, a medical examiner lists the cause of death on the death certificate as a heart attack or lung cancer. The insured could have been injured in a car accident, and dies a few days later from the injuries, but the medical examiner lists a disease as the cause of death, which is simply ridiculous. We almost always beat these denials as well.
- Many carriers will try to say that the cause of death can't be determined, and they will deny the claim. This is another one of their games that you won't be able to resolve yourself.
- Many claims are denied because the carrier said that there was some illegal activity the deceased individual was engaged in, known as a felony exclusion. For example, the person was killed while doing some illegal activity. We have a myriad of ways to get around these situations.
- Insurance carriers may claim that the employee was not full time, and deny your claim, but nobody knows how to handle these work life insurance claims better than us.
- Often, a life insurance company will change to another one, dropped the coverage of the insured in the process. Our attorneys can get you paid on these claims as well.
The “inherently dangerous activity” exclusion
Like most insurance policies, life insurance policies describe not only the conditions under which the insurance company will pay a claim, but also a list of policy exclusions. Exclusions are basically a list of pre-determined justifications that allow an insurance company to deny a claim.
One exclusion most people are familiar with in the life insurance context is the suicide exclusion. If a policyholder takes his own life, the insurance company is not required to make a payout to his beneficiaries in some circumstances. A lesser known exclusion, and the one we're talking about today, is the inherently dangerous activities exclusion. As the name suggests, this is a policy provision that allows the life insurance company to deny a claim if its policyholder dies while doing something that is terribly dangerous.
There are two principle types of inherently dangerous activities exclusions. In the first, the life insurance company leaves the policy language terribly vague. Typically, the policy will simply read that the insurer can refuse payment if the policyholder died doing anything inherently dangerous. This gives the insurance company great latitude in denying claims.
The second type of inherently dangerous activity exclusion is slightly different. It specifically describes those activities the insurance company deems to be inherently dangerous. In most policies, these activities include things like skydiving, scuba diving, and bungee jumping. When these types of exclusions are at play, the insurance company has a more difficult time issuing a claim denial if the policyholder dies doing something that is undoubtedly dangerous but not specifically prohibited by the policy.
Is horseback riding inherently dangerous?
In the case at hand, the insured, a man named Jim, had a life insurance policy that contained a very specific inherently dangerous activities exclusion. It read:
If the insured dies while engaged in any of the following activities, each of which the insurer has deemed to be inherently dangerous, the insurer will have no obligation to pay any claim submitted by the insured’s beneficiaries: sky diving, SCUBA diving, hang gliding, motorcycle racing, horse racing, rock climbing, bungee jumping, cliff diving, or base jumping.
Jim was an avid equestrian and, in fact, had been riding horses since he was a boy. On his 47th birthday, Jim went for a horseback ride with his friend Mike. The two men, who had always been a bit competitive with each other, made a bet while they were on the trail where the last guy to get back to the trailhead had to buy beers at the local tavern that evening. As you might suspect, Jim pushed the limits of his horse on the ride back to the trailhead. Shortly before the end of the ride, the horse ran Jim into a low branch. He was killed instantly due to a head contusion.
The insurance company invoked the inherently dangerous activity exclusion
Jim’s son Mark made a claim for the $750,000 benefit under his dad’s life insurance policy. Within a few weeks, he received a claim denial letter in the mail. The insurer justified its denial by invoking the inherently dangerous activity exclusion. Specifically, the insurer claimed that Jim died while engaged in horse racing, which was specifically prohibited by the policy.
Fortunately, Mark had the wherewithal to contact an attorney specializing in the wrongful denial of life insurance claims. The lawyer reviewed Jim's policy and listened to Mark’s explanation about the circumstances of his father's death. The attorney knew that the insurance company was not going to overturn its decision without a fight because the relevant policy language could possibly be interpreted in the way the insurance company was suggesting.
The attorney filed a lawsuit on Mark's behalf and quickly began the discovery process against the insurer. During that process, the attorney asked for evidence of how the insurance company had interpreted the term “horse racing” in the past. Previously, he discovered, the insurer had only invoked the phrase in cases where a professional jockey had died in an actual race (or in training for a race). It had also paid out on claims where other insureds died while engaging in casual horse rides.
Using this evidence, Mark’s attorney successfully argued that Jim was not engaged in the type of “horse racing” the policy contemplated. Rather, he argued, Jim passed away while enjoyed a casual ride with his friend – the very type of death the insurer had paid out on in the past. Consequently, the insurance company was ordered to pay Mark the full policy benefit, plus interest.
If you or someone you love have had had a life insurance claim denied based on a policy exclusion that doesn't quite seem to fit the situation, call our offices today. We will provide a free consultation that includes a thorough analysis of the relevant policy language. If we believe we can successfully contest your claim denial, you won't pay us a dime unless and until we obtain monetary recovery from the insurance company on your behalf. Call today. We're here to help.
One of the ways that life insurance companies turn profits is to deny claims from policy beneficiaries. While many consumers believe that life insurance companies are almost like charitable organizations – that they are there to hand out money to people in their greatest time of need – that really couldn't be further from the truth.
Sometimes, however, life insurance companies have no choice but to deny claims. We often use this column to discuss cases where lawyers specialized in contesting life insurance claim denials have succeeded in overturning a wrongful claim denial from a life insurer. This time, we are discussing a case where the insurer’s claim denial was legally sound. We do so in hopes that other policyholders won’t make the same mistake as the policyholder in this matter.
Sometimes the phrase “my husband” is not very specific
The case involved a woman named Jane. Jane was in her forties when she was offered a group life insurance plan through her new employer. In fact, during her first week of work, Jane was given a stack of “new hire paperwork” and told to fill it out and return it to the Human Resources department.
Within that paperwork were documents pertaining to her employer’s life insurance plan. Jane was asked to fill out a short application concerning her health and lifestyle habits. Jane had always been very healthy so there was never any question that she would qualify for a plan.
Indeed, the only problem with the way Jane filled out that life insurance paperwork would not be discovered until after her death some eight years later. Specifically, when Jane filled out the insurance forms, she was asked to name a beneficiary to her policy. Not giving the issue much thought, Jane replied simply “my husband.”
At the time, Jane was married to a man named Bob. Jane had been married to Bob for 15 years and could never envision a life without him. Unfortunately, Bob came to envision a life without Jane. Three years after she started her new job, Bob met and fell in love with a much younger woman. He left Jane and the couple was divorced within six months.
Jane was devastated and spent two years completely alone. Then she meant Jamison. He was everything Bob was not. He was handsome, successful, and loyal to a fault. The pair fell instantly in love and they were married just a few months after they met.
Through all of this personal chaos, Jane’s principle concern was to keep her work life steady. She worked long hours, received multiple promotions, and got through the hard times simply by remaining diligent and busy. One thing she did not do was pay attention to things like estate planning or life insurance.
Who is the beneficiary?
As noted above, Jane died eight years after she had started that new job. After her death, her employer sent all of Jane’s personal effects to Jamison. Among the things he received was a copy of Jane's life insurance documents. He reviewed them and found that Jane had listed as her life insurance beneficiary “her husband.” Jamison was so devastated by the loss of his new wife that he never even stopped to think that that paperwork might have been filled out when Jane was married to Bob.
Therefore, Jamison submitted a claim for benefits with the life insurance company. Among other things, he was required to submit with his claim form a certified copy of Jane's death certificate and a copy of her obituary. It was probably that obituary that gave the life insurance company the idea to deny Jamison's claim. After all, the obituary noted that Jane had been married to Bob for many years and that she had spent only the last few years blissfully married to Jamison.
Three weeks after submitting the claim, Jamison received a denial letter in the mail. The insurance company claimed that it was unable to pay out on the claim because Jane's designation of “my husband” as the beneficiary was vague given that Jane was married to two different men during the policy period.
Jamison spoke to a lawyer special specializing in the denial of life insurance claims. He was hoping to take the insurance company to court to prove that Jane intended for him to be the beneficiary. Unfortunately, the lawyer had to tell Jamison that his chances of prevailing against the life insurer were very slim.
The truth of the matter was that Jane had made the designation while she was married to Bob. The lawyer knew that in prior cases, courts held that where a policyholder had the opportunity to change her beneficiary designation but did not, the original designation would stand. Although Jane probably would have wanted Jamison to get the money, in the absence of any other estate planning documents expressing her wishes, there was simply no way to prove that.
Although we don’t enjoy reporting on cases where a person was unable to recover the life insurance proceeds they thought they were entitled to, sometimes we do so as a cautionary tale for those people considering a new life insurance policy at this time. The moral of this story is twofold: (1) policyholders need to be very specific in naming a beneficiary; and (2) they have to remain diligent about changing the beneficiary as life circumstances change.
Nonetheless, if you have received a life insurance claim denial that just doesn’t seem fair to you, call us. We’ll provide a free consultation and give you our honest thoughts about your ability to recover.
Flying Plane Denial
Life insurance is a game of risks. Ultimately, life insurance companies only want to ensure those people who have the lowest chance of dying before they have paid enough in premiums to cover the death benefit provided under their policy. Some people, however, engage in activities that are inherently dangerous. Nonetheless, many of these people still want to obtain life insurance policies.
While life insurers are happy to collect premiums from these individuals, they are not thrilled about the increased death risks stemming from their dangerous hobbies. The way insurers get around that dilemma is to add exclusions to their life insurance policies that relieve the company from making a death payout if the policyholder dies well engaging in certain defined activities.
One rather common exclusion is known as the “aviation exclusion.” This exclusion recognizes the inherent dangers that arise when everyday citizens obtain a private pilot’s license. Typically, an insurance policy containing an aviation exclusion will not allow for a death payout if the policyholder dies in a private airplane accident. As with other types of exclusions, however, insurance companies are known to stretch the limits of aviation exclusions. This article explores one such case.
A guy with his head in the clouds
The case involved a man named Richard. For his entire life, Richard had been obsessed with flying. As a young boy, he endlessly built model airplanes. As soon as he graduated from high school, he joined the Air Force. After retiring from the Air Force, he became an avid hobbyist within the aviation field.
Richard was also quite wealthy. He owned several airplanes ranging from single-engine prop planes to a private jet. Though he traveled the world quite extensively, Richard never flew on commercial airliners. If he wasn't flying one of his own airplanes, he would typically hire some sort of private jet to take him to the latest destination.
Richard was also a good planner. By the time he turned 50, he had a will in place, a trust fund set up to provide for his children, and a lucrative life insurance policy with his wife Barbara as the sole beneficiary. When Richard applied for his life insurance policy, he truthfully told the insurance company about his love for flying and the fact that he owned and flew private airplanes.
While the insurance company might typically shy away from offering a policy to a private pilot, Richard had two advantages. First, he understood the risks involved in private aviation. Therefore, he was more than willing to pay a higher premium in order to obtain a policy. Secondly, he was willing to purchase a policy that contained an aviation exclusion.
Specifically, the aviation exclusion in Richard's life insurance policy provided that the insurance company was not obligated to make a death payout if Richard died “while flying in any noncommercial flight, anywhere in the world.” Both Richard and Barbara understood this meant that if Richard died while flying any of his own airplanes, Barbara would not receive the $3 Million payout. While that wasn't ideal to Barbara, she knew it was the only way Richard would never qualify for a policy without an aviation exclusion.
Given how much time Richard spent in the air, perhaps no one was surprised that he ended up dying in a plane crash. The only thing surprising about the crash was that Richard was not piloting the airplane when it went down. Everyone who knew Richard knew that if he were in the air, he preferred to have control of the aircraft.
On the day he died, however, Richard had been called from his home in California to an urgent business meeting in Texas. None of his private planes were ready to make a long distance trip on a moment's notice. Therefore, Richard had contacted one of his friends who owned a business that flew small jets anywhere in the United States with just an hour’s notice. The service was not cheap, but Richard could afford it and preferred traveling that way over getting on a regular commercial airliner.
Following his death, Barbara filed a claim for benefits with Richard's life insurance company. Although she was well aware of the aviation exclusion in his policy, she presumed it would not apply since Richard died in someone else’s aircraft. Much to her surprise, however, she received a claim denial letter in the mail just one month after submitting her claim.
The letter stated that the aviation exclusion relieved the insurance company from paying the claim because Richard died on a noncommercial flight. Barbara’s brother was an attorney and he thought that reasoning seemed bogus. He immediately put her in touch with a colleague who specialized in the wrongful denial of life insurance claims.
Within a matter of days, the attorney had gathered ample evidence showing that the service Richard was using on the day he died was indeed a commercial airline service. Well he might not have been flying a major airliner like United or American Airlines, the plane Richard died in was part of a regular business that charged passengers for air travel. Indeed, it was licensed very similarly to those major airlines.
The attorney put together a packet of evidence and sent it off to the life insurer’s internal appeals board. In a letter that accompanied those documents, the attorney said that he would not hesitate to file a lawsuit on Barbara's behalf if they did not overturn the claim denial immediately. Faced with irrefutable evidence that the jet travel company was in fact a commercial enterprise, the appeals board overturned the claim denial within a matter of weeks.
This case is a good reminder that just because a life insurer denies a claim does not mean that decision is correct. If you have recently had a life insurance claim denied for any reason, please feel free to call and speak with one of our specialized attorneys. We will consider your case and give you are honest opinion about the chances of having your claim denial overturned.
Anyone who has ever shopped for life insurance knows that life insurance companies take cigarette smoking very seriously. In light of the known risks that cigarettes cause to one’s health, it is no wonder that life insurers frequently deny policy coverage to known smokers. The insurers’ concerns about smoking are so great that they often will not accept a policy applicant’s own representations about whether or not they have smoked cigarettes in the past.
In fact, even when an applicant claims never to have smoked a single cigarette, many insurers will still require a blood test that can detect even the slightest level of nicotine in the body. Moreover, some insurance companies have taken to scouring social media posts to see if they can catch applicants or policyholders in the act of smoking. If so, they then use that evidence to deny coverage when a person dies.
Like most things, however, cigarette smoking has evolved as advances in technology have occurred. When it comes to the ingestion of nicotine, those advances have come in the form of E-Cigarettes, or vape pens as they are sometimes called. Vape pens essentially allow a consumer to inhale nicotine by way of heated, concentrated liquid that creates a vapor. Advocates of vaping claim that the process cuts out many of the ancillary toxins that are ingested when a person smokes tobacco. Not surprisingly, detractors claim vape pens simply introduce a different variety of toxins into the body.
In all likelihood, only time will tell what the long term effects of vaping will be. That said, life insurance companies are having to scramble to deal with policy applicants and claim submissions that involve this alternate method of nicotine ingestion.
As attorneys who specialize in the wrongful denial of life insurance claims, we are highly interested in the legal and factual developments that are happening with respect to vaping and life insurance. In this article, we explore a couple of the ways that this new trend may impact the life insurance industry.
One of the main requirements of the relationship between a life insurance company and a policyholder is that the policyholder be truthful in his insurance application. Those applications typically ask about things like illnesses, chronic conditions, lifestyle, and habits (such as smoking). The failure to be truthful in response to these questions can have dire consequences for the insured.
In some instances, in fact, a life insurance company can avoid paying out a death benefit if it can prove that the policyholder made a “material misrepresentation” in his application. Material misrepresentations are essentially lies that are so significant that the insurance company would have never issued the policy had it known the truth. Lies about smoking cigarettes are often considered material misrepresentations.
Indeed, most applications today include questions such as, “ Have you ever smoked cigarettes? ” or “ Do you use tobacco products? ” What is interesting about these questions is that someone who has never smoked a cigarette but has regularly ingested nicotine via a vape pen can truthfully answer “No” to both of these questions.
Nonetheless, we’ve heard of instances where a life insurance company deemed use of a vape pen to be equal to the act of smoking cigarettes – and they’ve used this line of reasoning to deny otherwise valid life insurance claims. Only time will tell how courts will interpret these situations. For now, we contend that if any insurer plans to deny claims based on the use of vape pens, then they need to ask very specific questions in the policy applications about this practice.
If they don’t, we stand ready, willing, and able to contest life insurance claim denials that are made on these grounds. Life insurance companies need to say what they mean and mean what they say.
Inherently dangerous activity
Another favored excuse that life insurers use for denying claims is what’s known as the “inherently dangerous activity” exclusion. In essence, many policies state that the insurance company doesn’t have to pay a death benefit if the policyholder dies while engaging in an “inherently dangerous activity.” Some policies are great at defining this phrase to include things like SCUBA diving, hang gliding, or motorcycle racing. Other policies are more vague.
So, when faced with vague policy language, it is conceivable that a life insurance company would try to put the use of a vape pen within the meaning of “inherently dangerous activity.” This is especially true given recent news reports about vape pens that have exploded in users’ faces and caused death due to shrapnel from the explosion. While these cases are currently few and far between, life insurance companies will stop at nothing in their attempts to deny otherwise valid claims.
It’s all part of the game
As lawyers who specialize in the wrongful denial of life insurance claims, we’ve seen insurance companies rely on much more tenuous bases than these in denying valid claims. The truth is, life insurance companies do not make the profits their shareholders require when they indiscriminately pay out claims. To the contrary, they make the most money when they collect premiums from faithful policyholders for years (or in some cases, decades) only to deny claims when they’re made. We’ve seen this practice repeatedly through the years.
Given this track record, we won’t be surprised at all if vape pens don’t become the “new frontier” of life insurance claim denials. While they are technically very different from cigarettes, they are similar enough that the insurance companies are sure to draw parallels for the sole purpose of denying claims.
If you or a loved one have had a life insurance claim denied recently, please don’t hesitate to contact our firm. Your initial consultation is free. We’ll provide you with an honest evaluation of your chances of contesting that denial. If we think you have a valid case, you won’t pay us a dime unless and until you receive monetary relief from the insurance company.
We handle all delayed life insurance claims and denied life insurance claims as well as beneficiary disputes and interpleader actions.
Fill out our contact form today
As computer technology has become more prevalent, insurance companies have made it their go-to investigation tool when they need to find dirt about a policyholder. Recent news reports have revealed that life insurers will even scour a policyholder’s social media accounts to look for evidence of behaviors (like smoking) that they can use to deny coverage.
But they don’t stop there. In this article, we’ll explore the unbelievable claim denial received by a young mother on the West Coast. Fortunately, she had the wherewithal to hire an attorney specializing in the wrongful denial of life insurance claims. If she hadn’t, the insurance company might have gotten away with truly unconscionable acts.
A young marketing executive
The case involved a young man named Steven. Steven had always been a bit of a computer nerd. When he graduated from college with a business degree, he naturally gravitated to a career in digital marketing. In fact, by the time Steven was in his late 20s, he had a great job with a large brewery. After working there for a year, he was promoted to Chief Digital Marketing Officer and was granted additional benefits, including the opportunity to get a group life insurance policy.
In order to be eligible for the policy, Steven had to fill out an extensive questionnaire. It asked about past medical conditions, habits (like smoking), and lifestyle issues (such as frequency of exercise). At the time Steven filled out the application, he truthfully indicated that, among other things, he led a fairly active lifestyle. In fact, at the time he was the captain of the brewery’s recreational baseball and basketball teams.
Shortly after receiving his promotion, Steven learned that life as an executive was very different than being a regular employee. For example, Steven was now managed a dozen employees. As such, he was responsible for overseeing the social media posts that those employees made across around 20 different products that the brewery produced. He was also personally in charge of the brewery’s main social media accounts.
In other words, he was sitting in front of a computer about 90% of the time. He ultimately became so busy that he had to give up some of his favorite activities – like regular participation in recreational sports.
Too young to die
About 18 months after his promotion, Steven passed away unexpectedly after a short bout with a strong case of pneumonia. His friends, family, and colleagues were as shocked by his passing as they were devastated.
Steven had named his wife Ashley as his sole beneficiary under his life insurance policy. Roughly one month after her husband passed away, she filed a claim against that policy. Perhaps not surprisingly, the insurer almost immediately responded by letter, claiming that because Steven had died before the policy had been in place for two years, it was going to undertake a full investigation into the circumstances of his life and death.
This was actually a fairly standard response. Most life insurance policies contain what is known as a “period of contestability.” That means that if the policy holder dies within 24 months of when the policy was issued, the insurer can investigate whether the policyholder was truthful in filling out his policy application. Knowing that Steven was an exceptionally honest person, Ashley wasn’t worried in the slightest that the insurer was going to find anything.
Imagine her surprise, therefore, when a claim denial letter arrived in the mail two months later. In the denial letter, the insurance adjuster explained that the company had done a full investigation into Steven’s life, including an audit of the amount of time he spent on the internet. Given Steven’s line of work, they had discovered that he spent at least eight hours every day on social media sites. The adjuster stated this finding was in direct contravention of Steven’s claim that he led an active lifestyle.
More than anything, Ashley was shocked that the insurance investigation dove that deep into Steven’s computer usage. They whole thing made her extremely uncomfortable. Consequently, she retained an attorney who specialized in the wrongful denial of life insurance claims.
Successfully contesting the denial
The attorney requested the life insurer’s complete file on Steven’s investigation. He noted that while the insurer had exhaustively looked into Steven’s computer use, it didn’t do anything to try to determine whether Steven was still physically active. In fact, until he got sick, Steven still managed to play with the brewery’s rec teams at least once a week. He also went to the gym three mornings per week, which the attorney was able to prove by looking at the gym’s electronic records of his attendance (he had to swipe a credit-card device in the gym’s door to get in).
Just that amount of activity was more than 80% of the population. Thus, the attorney was confident the claim denial was wrongful and he took the insurance company to court. In light of all the evidence the attorney had gathered, the court had no problem overturning the claim denial following a one day trial.
This case illustrates one of the life insurer’s dirtiest tricks. They will look for reasons to deny coverage first, and then stop their investigation before gathering any contradictory evidence. In many instances, grieving beneficiaries are too devastated by the process to contest the resultant denial.
If you have had a life insurance claim denied and the reasons for the denial just don’t sit right, please call us today. We practice exclusively in this area and would be happy to help.
We handle all delayed life insurance claims and denied life insurance claims as well as beneficiary disputes and interpleader actions.
Fill out our contact form today
If you are a fan of television crime dramas, you are probably aware of a fairly common plot: a man and woman meet and fall head over heals in love. They marry quickly and live what appears to be a storybook life until one of them ends up murdered. The police are at a loss as for who could have committed such a heinous crime until they discover that one of them (usually the husband) took out a hefty life insurance policy on the other. The payout from that policy is determined to be the motivation behind the murder and the scheming spouse is sent away for a life in prison. Case closed.
There’s a reason this plot shows up so often in the movies and on TV – it’s a scenario that plays out with surprising frequency in real life as well. As attorneys who specialize in the wrongful denial of life insurance claims, we come up against this situation all the time. Of course, our clients don’t hire us to prove to a criminal court that they didn’t commit the crime. Our clients hire us when they are truly innocent of the crime, yet their spouse’s life insurance company is using the circumstances of the policyholder’s death to refuse payout on the underlying policy.
It is a sad reality of modern insurance practice that the insurer will do just about anything they can to avoid paying out a policy benefit. They do this, of course, because they make the greatest profits when they can collect years’ worth of premium payments from an insured, only to avoid paying a claim against the policy when that person dies.
In truth, for every case where one spouse does murder the other in an attempt to collect on a life insurance policy or a bequest under a will, there are just as many cases where the spouse was completely removed from the crime. Shockingly, even when all the evidence points away from the surviving spouse’s involvement, life insurers still try to avoid payment. This article explores one such case.
Just like the movies
The case involved a couple in their forties, Mark and Joann. They met on a singles cruise to the Bahamas. Mark was a successful insurance broker. Joann was a popular real estate agent. Both had been married right out of high school and were now divorced. They met within the first few hours of the cruise ship setting sail and were basically inseparable for the length of the trip.
Once they were back on land, the fairytale romance continued. The couple quickly introduced each other to their respective families and friends and everyone could see how much they liked one another. No one was surprised when they ended up eloping after just six months together.
Given that Mark was an insurance broker, he quickly set Joann up with the best policies money could buy. She had the best health insurance, auto insurance, home insurance, and, of course, life insurance.
You know where this is going. After about a year, the couple’s friends noticed that they had begun bickering about every little thing. While they never had knock-down-blow-out fights, they did seem annoyed with one another, especially if it was one of the frequent occasions when Mark had been drinking.
After 18 months together, Joann went missing. Mark was visibly shaken and was frequently on television news programs appealing for Joann’s return. Sadly, just two weeks after she disappeared, Joann’s body washed up on a local beach. The autopsy revealed that she had died of blunt force trauma to the head.
Not surprisingly, Mark started out as the number one suspect. The police crawled through every aspect of his life. What did surprise some people, however, was how quickly Mark was cleared as a suspect. The police determined that Mark had been the keynote speaker at an insurance conference in Las Vegas the night Joann disappeared. There was nothing in his electronic communications or recent history to suggest he had hired someone to kill his wife.
Joann’s ex-husband, Chris, however, had been communicating with a known hitman for several weeks prior to Joann’s disappearance. Additionally, he hadn’t shown up for work nor been at his apartment since the night Joann went missing. Furthermore, his DNA evidence was found in Joann’s home office and no one who knew her could believe she ever would have let Chris back into her life at all.
A claim denial for the insurance broker
Mark knew how life insurance worked. He waited until he was cleared of suspicion and the sole focus was on Chris before submitting a claim under Joann’s policy. Nonetheless, just 30 days after submitting the claim, Mark received a claim denial letter in the mail.
The letter stated that the vast majority of adult homicides are committed by the spouse, noted that no arrests had yet been made in Joann’s case, and said that in light of those two things, the insurer had to assume Mark killed his wife.
Mark had seen too many bogus claim denials in his day to take this lying down. He called an attorney he knew who specialized in the wrongful denial of life insurance claims. The attorney quickly gathered affidavits from the police investigators saying that Mark was no longer under suspicion and that they believed Chris, once found, would be convicted of the crime.
Notwithstanding those affidavits, the insurer wouldn’t relent. In the meantime, Mark’s attorney filed a breach of contract and bad faith case against the company. While that suit was pending, Chris was captured and convicted. This resulted in Mark receiving an immediate settlement offer from the insurer. It agreed to pay the full policy benefit, plus interest, if he would drop his bad faith suit against the company. Mark agreed and ultimately got the money he was owed.
Have you received an unjust life insurance claim denial? If so, call our office today for a free consultation. We may be able to help you get the benefit your loved one intended for you.
Our firm practices in one area of the law exclusively – the wrongful denial of life insurance claims. As such, we’ve seen life insurance companies pull some pretty incredible schemes when it comes to dreaming up reasons to deny a valid claim. While we’re never surprised, we are sometimes dismayed that they go to such great lengths to deny people money that is rightfully owed to them.
Why do they do this? If you’re a beneficiary who has recently had a life insurance claim denied, this question is probably in the forefront of your mind. The reason is simple. Life insurance companies are in business to make money. Like any business, life insurers have money that flows into the company and money that flows out. The money that flows in comes by way of the premiums paid by policyholders. Money flows out, of course, when the insurer has to pay a death claim.
Consequently, the more a life insurance company can collect premiums without paying claims, the more profitable it is at the end of the year. Unfortunately, this unyielding drive toward profitability sometimes comes at a great cost to beneficiaries who have claims wrongfully denied. To meet their goals, life insurers often issue claim denials that border on the ludicrous.
This article discusses one recent case involving just such a claim denial. While everything turned out ok for the policy beneficiary in the end, things easily could have gone a different direction.
A man and his dream dog
Doug was a very active man in his mid-forties. He had spent the bulk of his career working on oil tankers. Consequently, he was rarely home and his personal life suffered because of it. By the age of 43, he had never been married, never had children, and never even realized his life-long dream of getting his own dog.
That year, however, Doug was promoted off the tankers and into a position as a project manager at his oil company’s corporate headquarters. Along with his promotion came several new benefits, including the availability of a group life insurance policy. It would take effect as soon as Doug filled out a policy application and was approved for coverage by the insurer.
Doug quickly filled out the application. In it, he gave two responses that would later become problematic.
·The first question was, “Do you regularly engage in any inherently dangerous activities?” The application gave as examples of “inherently dangerous activities,” SCUBA diving and rock climbing. Doug truthfully answered “No” to that question.
·The second question was, “Do you have any pets that live in your home?” Doug truthfully answered “No” to that question as well.
Six months after getting his corporate position, Doug had purchased a home, found a wonderful girlfriend named Elizabeth, and finally got himself his dream dog – a sweet Pit Bull named Blue. Doug quickly filled out a Change of Beneficiary form naming Elizabeth, whom he planned to marry, as his life insurance policy beneficiary.
Around eight months after that, Doug and Elizabeth took Blue to a local dog park. They didn’t realize it as they approached, but another dog owner had brought a highly aggressive German Shepard to the park that day. Almost from the moment Doug, Elizabeth, and Blue entered the park, the German Shepard began attacking Blue. By the time Doug got them separated, Blue was bleeding from several wounds on her body but was so scared that she wouldn’t let Doug near her. Once Doug finally got Blue on leash, the German Shepard got loose from its owner, ran toward Doug and Blue, and this time attacked Doug. Doug suffered a puncture wound to a major artery in his neck and died very quickly.
A stunning denial
Elizabeth was obviously devastated. Nonetheless, within a month of Doug’s passing, she filed a claim for death benefits with Doug’s life insurance company. He had died in such a freak manner that she thought there was nothing that would prevent the insurer from paying. She was wrong.
Because Doug died before he’d been insured by the company for a full two years, the policy was still in what’s called the “period of contestability.” That basically means the insurer can investigate the circumstances of the policyholder’s life to look for any discrepancies between his actual life and the life he portrayed on his policy application.
According to Doug’s insurer, it had two reasons for denying Elizabeth’s claim: (1) Doug had lied on his application when he said he didn’t have any pets; and (2) Doug lied about not engaging in any “inherently dangerous activities” because, according to the insurance company, the very act of owning a Pit Bull was inherently dangerous. Elizabeth was beside herself. She knew Doug would have never lied and also knew their dog Blue was the sweetest, most gentle dog on the planet.
A friend suggested Elizabeth contact an attorney specializing in the wrongful denial of life insurance claims. After reviewing the facts and exhaustively reading Doug’s policy, the attorney knew the claim denial was a ruse. First of all, Doug did not have any pets at the time of his application. Nor did the application request that Doug update the insurer if his answer to that question changed. Moreover, nowhere in the policy did the insurance company even suggest that ownership of any certain type of animal could be “inherently dangerous.”
The attorney sued the insurance company on Elizabeth’s behalf. During depositions in the case, the attorney learned that the insurer had never denied a death claim previously on the basis that owning a Pit Bull was inherently dangerous. It was just an excuse they concocted to deny Elizabeth’s claim. Shortly after that revelation, the case settled out of court with Elizabeth receiving the full policy benefit.
If you have had a life insurance claim denied for any reason that just doesn’t seem right to you, please call our firm today. We’re here to help people exactly like you.
According to some studies, nearly 70% of Americans have pets living in their home. Of those, a great percentage are cat owners. Many people prefer cats because they are relatively easy to take care of and, aside from killing an errant mouse or two, are generally very docile and affectionate.
In fact, cats are so mellow that they are rarely thought of as “killers.” What many people do not know, however, is that a cat bite can be terribly serious. If a cat’s tooth punctures the skin, it can cause an infection that, if left untreated, can actually cause death.
Notwithstanding that risk, most people do not consider cats as a dangerous pet. In fact, even though we are lawyers specializing in life insurance law, we’ve never heard of a life insurance company rejecting someone’s policy application because the applicant had cats in his home. Nor have we heard of people having to pay higher life insurance premiums due to their ownership of cats.
Nonetheless, we did hear of a recent case where a cat bite all but nullified a person’s life insurance policy. While this article is certainly not meant to disparage cats, it is intended to point out just how ridiculous life insurers can be in denying valid claims from policy beneficiaries.
First, life insurers issue wrongful denials for the simple fact that the more payouts they can avoid, the higher their profit margins at the end of the year. The truth is, life insurers are for-profit businesses. Even though life insurance payouts can seem charitable to the beneficiary who desperately needs the money after losing a spouse, for example, life insurance companies aren’t in this to “do good.” The more premiums they can collect, and the more claims they can deny, the better things look to company shareholders.
Consequently, life insurance companies train their claims examiners/claims adjusters to be skewed toward claim denials. Often times, these employees are given strict guidelines for denying claims that have very little to do with the legal propriety of the decision. The insurance companies know that the vast majority of beneficiaries aren’t lawyers and aren’t likely to recognize when a wrongful claim denial has been issued. Thus, they roll the dice with illegitimate denials in hopes that the beneficiaries won’t put up a fight.
That’s precisely why hiring a lawyer who specializes in this area of the law is so important. This article presents the facts of one recent case that illustrates this point nicely.
The legal impact of divorce on life insurance
The case involved a couple, Tim and Alicia, who had been married for a long time. Although everyone predicted their marriage would last forever, Alicia ended up having an affair and the couple divorced just before their silver wedding anniversary.
At the time of the divorce, each of them held a life insurance policy worth a $500,000 payout. They had purposefully named each other as sole beneficiary under the respective policies and, despite the divorce, neither of them intended to change those designations.
Sadly, Tim passed away just seven months following the divorce. Alicia felt terrible about it but went ahead and submitted a claim for benefits to Tim’s life insurance company. She didn’t see any reason why she couldn’t or shouldn’t collect the money he had intended for her.
The claim denial
Just about a month after submitting her claim, Alicia received a denial letter in the mail. The claims adjuster explained that the law of the state where the couple lived automatically revoked a former spouse as a life insurance beneficiary once their divorce was final. Alicia was no lawyer, but she was fairly good at internet research. Sadly, a few quick Google searches confirmed that state law did, in fact, force that revocation.
Alicia was just about resigned to live with the claim denial when her brother, a lawyer who lived in another state, called to check in on her. Even though she hated to bother him with legal questions, she read him the claim denial letter and asked if she should just walk away. He didn’t know the answer in that moment, but offered to contact a colleague who specialized in the wrongful denial of life insurance claims. It’s a good thing he did.
Sometimes, federal law trumps state law
The next day, Alicia spoke to her brother’s colleague. He asked to see the life insurance policy documents, as well as the claim denial letter. He said he would call her back after he had an opportunity to look at everything. Alicia didn’t have high hopes that anything would change.
Thankfully, she was wrong about that. As it turned out, Tim’s life insurance policy had been issued as a benefit of his employment. As such, the policy was governed by a federal law known as ERISA. Therefore, policy decisions had to be made according to federal law, not state law. Significantly, federal law did not automatically revoke a former spouse as a beneficiary once the couple got divorced.
In other words, the claims examiner who issued Alicia’s claim denial letter was wrong. Tim’s designation of Alicia as his beneficiary had not been revoked as a result of their divorce. The next day, Alicia’s attorney called the in-house legal department for the life insurance company to discuss the situation. The insurer’s attorney was embarrassed by the claim denial letter. It turns out the claims examiner had no legal training and was only following decision protocol outlined in a very basic employee manual.
Ultimately, Alicia was awarded the full policy benefits, plus interest.
This case is an important one because it shows just how important it is to question a life insurance claim denial. As noted earlier, most claims adjusters have no legal training whatsoever. They are encouraged to deny as many claims as possible. They have a heavy workload and often don’t have time to even try to understand legal intricacies like the differences between state and federal law.
Think about this case from Alicia’s perspective. If she wasn’t lucky enough to: (a) have a brother for a lawyer; and (b) have a brother who knew a colleague who specialized in wrongful life insurance claim denials, she would have walked away from a half a million dollars.
That amount of money can make the difference between financial security and dire straits. It can mean the difference between early retirement and working well past retirement age. These are the kinds of major life outcomes that life insurers put into the hands of claims adjusters who have very little (if any) understanding of how the law impacts policy decisions.
If you have recently received a life insurance claim denial and you’re unsure whether it is legally sound, why don’t you give our office a call? We offer a free consultation. If we believe we can help you get money that is rightfully yours, you won’t have to pay us a dime unless and until we achieve monetary recovery on your behalf. Call us today. We’re here to help.
Life insurance can be a sound financial planning tool that families use to ensure loved ones are financially stable if and when a main breadwinner passes away unexpectedly. The way life insurance is supposed to work is simple: (a) a person applies for and obtains a policy; (b) he pays regular premiums to keep the policy in place; and (c) when that person dies, his beneficiary submits a claim and receives a predetermined death benefit.
All too often, however, grieving beneficiaries receive the shock of their lives when their life insurance claim is denied by the insurance company. What these unsuspecting consumers don’t know is that life insurance companies are sometimes more interested in denying claims than in paying them. The reason for this is a matter of basic economics. If the insurer can regularly collect steep premiums and then deny claims against a policy when the time comes, the insurance company has made a tidy profit. Shareholders and executives like profits.
To make matters worse, the process for contesting a claim denial is often arduous and confusing. In some instances, the insurer requires that a beneficiary turn to an internal claim denial review panel before seeking redress in the courts. In other cases, a beneficiary may have to involve a state agency in the administrative review process.
In nearly every case, the beneficiary is at an extreme disadvantage. The insurance company employees charged with reviewing claim denials are well versed in policy language and policy loopholes. They are also employed by the insurance company. Thus, they have a built in incentive to side with their employer when deciding on claim denial appeals.
Fortunately, there are law firms like ours that specialize solely in helping beneficiaries contest life insurance claim denials. After years of focusing on this work, we’re just as well-versed in life insurance policy language as the life insurance lawyers and other employees. We know when claim denials are bogus and when they are legitimate. We can help you navigate the intricate and sometimes confounding process of contesting a claim.
#1: The day you receive the claim denial letter in the mail
A life insurance claim denial is one of the worst pieces of mail a person can receive. Opening that letter can instantly blur the fine line between financial stability and financial ruin. In light of this, it is understandable that many people simply wad up such letters that throw them in the trash. We implore you – please don’t do that.
First, try to calm yourself down and go sit in a quiet place where you can focus on the entire document. Life insurance companies don’t just get to send short letters saying “Claim Denied.” Rather, they have to tell you with a sufficient level of detail exactly why they are denying your claim.
Read this section carefully. In fact, read it over and over until you feel like you can articulate for yourself the reason for the denial. Generally speaking, life insurance companies have a limited universe of justifications for claim denials. They include things like a lapsed policy, material misrepresentations in the policy application, unknown cause of death, death due to suicide, or death due to an inherently dangerous activity.
If the reasoning behind the denial doesn’t sit right with you, it’s time to call a lawyer specializing in the denial of life insurance claims. We’ll provide a free consultation and assist you with determining whether you have a valid reason to contest the claim denial.
#2: When you have to file an administrative appeal
The claim denial letter may also set forth a process by which you can ask the insurance company’s internal appeals board to review the denial. Typically, the letter will give you a short window within which to submit this administrative appeal. The reason behind this urgency is to make you feel like you don’t have time to seek the advice and counsel of a lawyer. Don’t fall for it.
Remember, the appeals board is made up of employees of the very insurance company that just denied your claim. Their job is not to help you recover the benefit that was intended for you. Frankly, their job is to try to make you accept and acquiesce to the claim denial. In doing so, they will use highly technical policy language and a large dose of legalese. All of this, of course, is aimed at getting you to simply go away.
When you hire an attorney specializing in life insurance claim denials, however, we will handle the administrative appeal for you. In fact, once you have retained a lawyer, the insurance company may no longer speak directly to you without your lawyer present. And the good news is, we know the law and the specifics of policy language as well as the appeals board does. In fact, we fight with these bodies every day and have an excellent track record of beating them at their own game.
#3: When you get a final denial decision from the insurer
Importantly, the internal appeals process is not the final step in contesting a life insurance claim. If the appeals board upholds the denial of your claim, that typically means you now have the right to take the insurance company to court. This, of course, is a critical time to contact a lawyer specializing in life insurance claim denials. Because we file these types of lawsuits every day, we know the particular claims that are available to you. We also know the different remedies you may be entitled to – in some cases exceeding the original policy amount.
The legalization of marijuana has also had vast effects on the life insurance industry. By way of illustration, many life insurance policies have traditionally contained a policy exclusion that relieves the insurance company from paying out a death benefit if the insured dies during the commission of a crime. Any time a policyholder was found to have been using marijuana at the time of his death, the life insurer would invoke that exclusion and refuse to pay policy benefits to the person’s beneficiary.
Given the prevalence of marijuana use even prior to legalization, this policy exclusion was a lucrative one for life insurance companies. This is because the more times a life insurer can deny claims, the more money it gets to keep in its coffers for executives and shareholders. Thus, denials based on marijuana-as-a-crime were popular and frequently invoked.
Now that nearly half the states have legalized recreational use of marijuana by adults, life insurance companies are having to rethink their claim denial strategies. As attorneys who specialize in the wrongful denial of life insurance claims, we are witnessing this issue evolve every day.
This article explores some of the ways life insurance companies are continuing to use marijuana use as an excuse to deny claims, even in states where the drug is fully legal.
Inherently dangerous activity
Many life insurance policies contain exclusions that release the insurer from paying out claims when the policyholder dies while engaged in an “inherently dangerous activity.” Traditionally, inherently dangerous activities have included things like SCUBA diving, motorcycle racing, or bungee jumping. In essence, insurance companies claim that, statistically speaking, those activities are so dangerous that they increase a person’s likelihood of dying prematurely.
Today, however, some insurance companies are taking the use of marijuana in conjunction with any other activity, and deeming it to be inherently dangerous. For example, a person walking down the sidewalk of a busy street has never been considered inherently dangerous. If a person walks down that same sidewalk under the influence of marijuana, however, some insurers are claiming the activity magically becomes inherently dangerous.
We don’t see these claim denials getting much traction in the courts and we’re happy to contest them. We realize the insurance companies are grasping at straws and we can typically overcome these claim denials quickly.
Material misrepresentation about smoking
Life insurance policies are legally binding contracts. As such, each party has to be honest with the other during contract negotiations. In the life insurance context, this means that a policy applicant has to give the insurer truthful information when he is applying for a life insurance policy. If the applicant tells a significant lie in application paperwork, the insurer can often avoid making policy payouts based on that person’s “material misrepresentation.” That is just a legal term for a lie that is serious enough that had the other party known the truth, it would have made different decisions about entering the contract.
For decades, policy applications have asked about cigarette smoking habits. People are unusually tempted to lie and say they don’t smoke even when they do. This is probably because they know smoking is so dangerous that they may not qualify for a policy at all if they admit to it.
Today, however, insurance companies are claiming that if an applicant denies being a cigarette smoker, is a non-smoker, but does smoke marijuana from time to time, that that is enough of a material misrepresentation about smoking to justify a refusal to pay out claims. In truth, however, studies are starting to reveal that marijuana smokers do not suffer from lung cancer and other diseases at the same rate as cigarette smokers. Thus, this denial justification also appears to be a ruse.
Material misrepresentation about marijuana use generally
Given that marijuana use is so popular, many insurers have long included application questions aimed specifically at the applicant’s use of cannabis. An interesting issue has begun to arise with respect to these questions.
Let’s say, for example, that a policy applicant affirmatively stated that he did not use marijuana products. At the time of the application, marijuana use was still illegal in his state and, not one to break the law, the applicant’s statement was true. Imagine that a year into the policy term, however, the policyholder’s home state legalized the recreational use of marijuana and the policyholder became a frequent user.
If the policyholder later dies and the insurance company makes an inquiry into the truthfulness of his policy application, would that initial denial of marijuana use be deemed a material misrepresentation that would nullify the policy? We certainly don’t think so, but we have seen life insurers try to invoke this excuse for denying perfectly valid claims.
As marijuana laws continue to evolve so too will the ways that life insurers rely on the drug as a justification for claim denials. Without a doubt, much litigation will be spawned between life insurance companies and policy beneficiaries who have had claims denied based on marijuana use. You can bet that our firm will stay on top of all these legal developments and may even be at the forefront of protecting beneficiaries who have had claims denied on this basis.
Contrary to popular belief, life insurance companies are not in business to pay out claims to policy beneficiaries. Rather, like most other companies, they are in business to turn a profit. The best way for a life insurer to do this is to collect premiums from a policyholder over a period of years and then come up with a way to deny payment to that policyholder’s beneficiary at the time of death.
As lawyers who specialize in the wrongful denial of life insurance claims, we have seen insurance companies be highly creative in their justifications for denying valid claims. One of their principle tools for claim denials is the policy exclusion. Whenever a policyholder dies, if the life insurance company can fit the circumstances of that person's death within a policy exclusion, you better believe they're going to do it.
In some of the most shocking cases we've seen, a life insurer will invoke the suicide exclusion in order to deny coverage even when all of the facts and circumstances of the case suggest that the insured did not intend to kill himself at all. Surprisingly, the life insurance company is not bound by the conclusions reached by people like the police or coroners who are investigating a matter. Even when those officials decide a death was accidental, the life insurance company can still claim that the death was due to suicide. They do this, of course, simply to avoid making death payouts to beneficiaries.
This article explores one particularly shocking case where a life insurance company tried to invoke the suicide exclusion in order to deny benefits to the wife of an undeniable hero.
The kind of guy you want around in an emergency
Bob was the type of neighbor everybody wants to have. He could fix just about anything, he was generous in lending out his tools, and he always had a joke and a smile for anyone who walked past his house. There wasn't a person in the neighborhood who had a bad word to say about Bob.
Bob was a dock worker. He belonged to the longshoreman's union and received several benefits via his union membership, including a life insurance policy. Bob's policy had a $500,000 payout. Bob named his wife Barbara as his sole beneficiary.
One summer afternoon, Bob was chatting with his wife while he worked on the vintage car he was restoring. As they were talking, both Bob and Barbara suddenly noticed the smell of smoke. Barbara would later report that she and Bob saw the flames simultaneously. The house across the street, which was owned by an elderly neighbor named Daniel, was on fire.
Bob yelled at Barbara to call 911 as he started running across the street. Without a moment's hesitation, he ran into the burning home in an effort to save his elderly neighbor. He was able to get the man out of the house and safely onto the sidewalk. Then Bob did something that surprised everyone. He ran back into the burning house to save Daniel’s beloved cat. Unfortunately, Bob never made it out of the house. Firefighters would later report that Bob had been struck by a falling ceiling beam, at which point he succumbed to the smoke and flames.
Definitely not suicide
Several weeks after Bob's death, Barbara made a claim for benefits under his life insurance policy. She never could have dreamed what was going to happen next. One month after submitting her claim, Barbara received a denial letter in the mail. The reason for the denial was shocking. Specifically, the insurance company stated that since Bob had run into a burning building voluntarily, he had clearly intended to cause his own death. Consequently, the letter continued, the insurer was not obligated to pay the claim since Bob’s death came within the policy’s suicide exclusion.
Barbara was beside herself. She shared the letter with one of her neighbors who was equally incensed. Fortunately, that neighbor knew of a lawyer who specialized in the wrongful denial of life insurance claims. Barbara spoke to the lawyer on the telephone and then forwarded him all of the policy documents as well as police and fire department reports about the incident – both of which noted Bob’s extreme heroism in the situation.
The lawyer reviewed the paperwork and then called Barbara with a few more questions. Specifically, he wanted to know whether Bob had any plans for the future -- anything that would suggest he was a person who wanted to live, as opposed to someone who would commit suicide. For Barbara, the answer was easy – Bob had been restoring that vintage car for years just so he could drive it to his 40thhigh school reunion the following summer. They also had plans to take an Alaskan cruise just a few weeks after Bob passed away.
This was all the lawyer needed to know. He prepared a written brief outlining all of the evidence suggesting that Bob was not suicidal. Bob’s future plans, friendly demeanor, and sense of duty were among the things listed in the brief. The lawyer submitted the brief to the insurance company’s internal appeals board with a letter stating that Barbara would sue for bad faith denial of claim if the company didn’t overturn its decision. The letter also reminded the insurer of the bad publicity that would accompany such a lawsuit.
Within a matter of weeks, the insurance company did, in fact, overturn the claim denial. Barbara was paid the full policy benefit with interest. The case just goes to show how far insurance companies will go to try to avoid paying valid claims and how helpful a specialized lawyer can be in getting faulty claim denials overturned.
If you have recently had a life insurance claim wrongfully denied, don’t just accept the insurer’s decision. Call our office to discuss your options. The consultation is free and if we can possibly help you recover the benefits that were intended for you, we will.
If you speak to anyone who has been involved in the gay rights movement, they will tell you that discrimination against gays and lesbians has gone down dramatically over the past 25 years. They will also tell you that anti-LBGTQ discrimination is still alive and well, it is often just deployed in subtler ways in modern America.
One of the industries that has been all over the map with respect to the LBGTQ community is the insurance industry. Life insurers, in particular, were perceived my many to be harsh in the face of the AIDS crisis. Even though HIV and AIDS are far less of a death sentence than they were in years past, there are still issues that arise from time to time with respect to life insurance coverage.
As lawyers who specialize in the wrongful denial of life insurance claims, we’ve seen these issues crop up in our practice repeatedly. While anti-discrimination legislation has done a lot to stem the harsh treatment of gays and lesbians by insurance companies, it doesn’t mean that we don’t still hear from policy beneficiaries who believe they are on the receiving end of outright unfair practices.
This article explores one such case and a life insurer’s alleged effort to deny benefits based on one man’s sexuality.
An effort to prevent disease
The case involved a gay man named Nick. Nick had been fortunate enough to live most of his adult life during a time when HIV and AIDS were a much lesser threat to his community than they had been in the past. Nonetheless, as disease rates dropped among gay men, there was a rise in unprotected sex. This put any sexually active man at risk for contracting a lingering strain of HIV.
Nick was a highly successful accountant with a large accounting firm. One of his employment benefits was a group life insurance plan offered by his employer. Despite the fact that it was a group plan, Nick still had to go through an application process before he could be issued a policy. Part of that application process involved a physical exam and an extensive application form that asked about Nick’s health, any history of disease, and any hobbies or vices he might engage in that put him at risk of an early death.
One significant fact about Nick was that he was very protective about his sexuality. He was only “out” to a few friends and was completely closeted with everyone at his work. Thus, when the policy application (which he had to turn into his firm’s HR department) asked whether Nick was taking any medications, he replied “no,” even though the answer wasn’t truthful. In fact, for over a year Nick had been taking a medication known as a PrEP, or pre-exposure prophylaxis.
One of the primary uses of PrEP medications is to prevent transmission of HIV. It is a widely prescribed drug among the gay male population. Nick knew he should have revealed his use of the drug in his application, but was worried that the revelation would reveal his sexuality to his employer. Yet, since the drug was actually aimed at preventing disease, he figured it would not have negatively impacted his life insurance application in any event.
When the truth comes out after death
Nick was issued a life insurance policy and his accounting firm faithfully paid all of his premiums. Out of an abundance of caution, Nick had named his sister Sarah as his beneficiary. Nick and Sarah agreed, however, that Sarah would pay 80% of the insurance proceeds to Nick’s partner of 10 years.
Sadly, Nick died under suspicious circumstances just 14 months after obtaining his policy. Specifically, Nick just passed away in his sleep at the tender age of 48. Given that Nick had no other health concerns, a full autopsy report was ordered. Among other things, the autopsy included a full tox screen for the presence of foreign substances in Nick’s blood.
The autopsy revealed that Nick had died as the result of a blood clot that went to his heart. The cause of death was listed as “natural causes.” The autopsy report also listed all substances found in Nick’s body. In addition to some cold medicine Nick had been taking, the report revealed the presence of the PrEP.
When Sarah submitted a claim to Nick’s life insurance company, she was asked to include a copy of the autopsy report. Upon receiving that paperwork, the insurance company determined it needed to do further investigation into Nick’s history. During that process, the company learned that Nick had been on the PrEP medication (yet failed to reveal it) during his application process. It also learned that Nick had been living with his male partner for nearly a decade. Some suspected those facts led the company to conclude Nick likely engaged in risky sexual practices. The insurer denied Sarah’s claim entirely.
Though the life insurer didn’t spell out its denial justifications that clearly, Sarah suspected the denial was a simple ruse for discriminatory practices by the insurer. She contacted a lawyer specializing in the denial of life insurance claims and explained the situation. The lawyer agreed that Sarah could be on to something. He filed suit against the insurance company.
During discovery, Sarah’s attorney uncovered an important fact. The life insurance company had not denied claims involving other deceased policyholders who had taken PrEPs – but none of those policyholders were gay men. The attorney argued that Sarah’s claim denial was simply institutional bias by the insurer. Shortly after that discovery, the insurance company settled Sarah’s claim out of court.
While no one will ever know whether that life insurer truly had the intent to discriminate on Nick based on his sexuality, its actions certainly suggested that could have been the case. If you have had a life insurance claim denied and suspect that some kind of discrimination is the true motive for the denial, please call us. We’ll provide a free consultation and give you our true assessment of the situation.
We handle all delayed life insurance claims and denied life insurance claims as well as beneficiary disputes and interpleader actions.
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Facts on Genetic testing and Life Insurance
Sometimes, the modern advances in technology are mind-boggling. One of the most notable advances impacting everyday Americans is the availability and low cost of extensive genetic testing. Websites like Ancestry.com or 23andMe typically charge around $100 for genetic testing that would have cost tens of thousands of dollars not too long ago.
These tests can do amazing things for families and individuals. For example, people who have been adopted are able to reunite with biological family members who have also done genetic testing with these websites. Additionally, however, individuals are able to pay for a fairly comprehensive genetic workup relating to a whole host of diseases.
Specifically, people can pay to determine whether they have a genetic predisposition to things like Alzheimer’s disease, Parkinson’s disease, or certain types of cancer. This knowledge, while invaluable to the individual, may have implications in other areas of a person's life. For example, if a person learns she is predisposed to a particular type of breast cancer, is she obligated to notify her health or life insurance companies? These are questions that the courts will have to sort out in time.
For now, this article explores how genetic testing may impact a person's interactions with their life insurance company. In truth, readers may find that if they want to keep their eligibility for life insurance intact, they may not want to seek genetic testing prior to obtaining a policy.
How knowledge impacts insurability
Typically, when a person applies for a life insurance policy, they are required to answer several pages of questions and sometimes submit to a physical examination. Life insurance companies require these processes because ultimately they are in a game of risks. Whenever a life insurance company issues someone a policy, they are betting that person will live long enough and pay enough premiums that the life insurance company will not lose money when it has to make a death payout.
Conversely, if a life insurance company thinks a person is at a high risk of experiencing an early death or illness, they either won’t issue them a policy at all or they will issue a policy with exorbitant premiums. Of course, the only way a life insurance company has to make determinations about risk is by performing several inquiries as part of the policy application process.
Life insurance companies know that the law is on their side when it comes to what a potential policyholder must tell them during that application process. In fact, the life insurance application process is really nothing more than a contract negotiation. Contract law is very clear that both parties must be truthful with one another when negotiating the terms of a contract. If one side is untruthful, and the truth would have led the other party not to enter into the contract at all, the lie is said to be “material.”
In the life insurance context, this means that if the applicant lies about his health risks, and the insurance company issues a policy in reliance on those mistruths, the insurer may not have to make a death payout when the policyholder passes away. For example, if an application questionnaire asked whether the applicant was at risk for contracting any particular diseases, and the applicant responded “no,” despite having done genetic testing showing a predisposition to Alzheimer’s, that mistruth could be the type of material misrepresentation that would nullify the policy.
If you think about it, these technological advances are a game changer when it comes to obtaining life insurance. In the past, a person might have had vague knowledge that a few of their ancestors had contracted Alzheimer's disease, but they would have no hard evidence to suggest that they were also at risk for suffering from that disease. With today's genetic testing, however, a person might have a very strong basis for believing they were at risk for Alzheimer's. And, once they have that information, it must be shared with the insurer during the life insurance application process.
Consequently, if you are looking to obtain a new life insurance policy and you have not yet undertaken any genetic testing, you might want to wait till after a policy has issued to undergo those tests. Since there is no obligation for an individual to undergo genetic testing, there would simply be no information that you would be legally bound to disclose.
What if you get genetic testing done after obtaining a life insurance policy?
Generally speaking, once you have obtained a life insurance policy, you have no duty to update your insurance company about the status of your health. Therefore, if you have had a policy in place for years and you later have genetic testing done that shows a predisposition to Alzheimer's, you would not have any obligation to notify your insurance company of those test results.
Keep in mind, however, that if your policy should lapse for any reason, you may be required to undertake an entirely new policy application. In that new application, you would have a legal duty to disclose this new information. This is another reason why it is so important to keep your life insurance payments current.
The future of genetic testing and life insurance
In the future, it is possible that a life insurance company will require applicants to undergo genetic testing prior to receiving a policy. For now, learning about one’s predisposition for various diseases is up to the individual. While we all have some level of curiosity about this information, consumers need to remember that such knowledge could impact their ability to obtain life insurance policies intended to protect their family’s financial security.
If you have questions about how genetic testing may impact your existing policy, please feel free to contact one of our attorneys. Likewise, if you have had a life insurance claim denied on the grounds that the policyholder failed to disclose a known predisposition to disease, give us a call. This area of the law is still relatively new and we can help you navigate your way through the process.
Denied Life Insurance Claims: Tobacco Use
It’s no secret that smoking cigarettes is hazardous to your health. Hundreds of thousands of people die from smoking related illnesses in the United States every year. In addition to cigarettes, chewing tobacco, and cigars are all forms of tobacco use that can cause illness.
So, it shouldn’t come as a surprise that insurance companies have a vested interest in knowing whether or not you use tobacco. There are questions regarding tobacco use on nearly every insurance application in which insurers assess the individual risk of the insured to determine the cost of their premium.
If you are a 20-year user of tobacco and truthfully admit to such on your life insurance application, you could be denied for coverage, or your policy premiums could go through the roof. This is a reason some people neglect to be forthcoming or underreport their tobacco use on their applications.
If your insurance provider determines you lied about tobacco use on your application, they can deny your beneficiary’s claim in the unfortunate event of your death. However, not all life insurance claim denials are legitimate.
Sometimes, insurance companies will use tobacco use as a reason to deny a claim even when it has no obvious contribution to the cause of death. If you were denied claims, a life insurance claim denial attorney may be able to help.
Why do insurance companies care if you use tobacco?
According to the Center for Disease Control (CDC) fact sheet on smoking and tobacco use , 480,000 people die every year in the United States from diseases and illnesses directly caused by smoking cigarettes.
·Smoking is the leading cause of preventable death in the United States
·6 million people die annually worldwide (expected to climb to 8 million by 2030)
·Tobacco use is responsible for more than $170 billion in healthcare costs annually
·41,000 people die every year from second hand smoke
·People who smoke die on average 10 years earlier than those who don’t
These statistics should make it obvious that tobacco use poses a risk to insurers’ bottom line. It’s simply a matter of profit. If you smoke or use tobacco products, they will charge you a higher premium because they are more likely to have to pay out sooner on your policy than they will on a non-smoker’s policy.
What do insurance companies considered tobacco use?
Cigarette smoking is obviously considered tobacco use as well as chewing tobacco and cigar smoking. However, insurance companies care about other substances that are commonly grouped together with tobacco as well.
Electronic cigarettes or vaporizers that deliver nicotine and nicotine patches or gums are all commonly considered risk factors to insurance companies. If you consume tobacco in any of the forms mentioned here, you almost always will have to disclose that on your life insurance application.
Marijuana currently presents a grey area when it comes to life insurance. It is legal as a prescribed medication in many states and some insurance companies are more than happy to insure you as long as you have a doctor’s prescription.
However, marijuana is still illegal in every state as far as the federal government is concerned. And many insurance policies follow federal law, consider marijuana an illegal narcotic, and deny coverage in the presence of its use.
Honesty is always the best practice. Typically, insurance companies are concerned about tobacco use in the past 1-5 years depending on the carrier and other variables. Failure to disclose tobacco use on your insurance application is a common excuse insurance companies use to deny your life insurance claim.
How do insurance companies deny your claim?
The most common excuse insurance companies use to deny your life insurance claim is material misrepresentation. Essentially, they accuse you of lying or omitting facts that, had they known, would have resulted in the denial of coverage in the first place, or would have triggered a higher premium on the policy.
This typically happens when you die before the two year contestability period at the beginning of the policy term. During this time, insurers reserve (and almost always exercise) the right to investigate a life insurance claim.
In an obvious example, let’s say you are a regular cigarette smoker but fail to disclose that on your life insurance application. Insurance companies don’t usually fact check your answers and take you at your word so they set a premium rate and you pay that faithfully.
Fast forward a year and you are diagnosed with terminal lung cancer as a direct result of smoking cigarettes. You’re gone in a couple months. When your beneficiary files a claim, the insurance company will likely discover your deceit and deny the claim.
It isn’t always so cut and dry however. What if you took up smoking after you filled out the application? And what happens when the death is in no way related to the misrepresentation? Or the level of tobacco use wouldn’t have made much of a difference in premium if at all? Don’t assume that just because your claim was denied that you don’t have options.
What to do if your claim was denied?
As you have seen, life insurance claim denials based on tobacco use can quickly become complicated. You should never simply take your insurance company’s word that they aren’t liable for the claim. If your claim was denied, you probably have a limited time to appeal before your benefits disappear forever.