Life Insurance Lawyer Arizona

Whether you reside in: Peoria; Tempe; Gilbert; Scottsdale; Glendale; Chandler; Mesa; Tucson; or Phoenix; our life insurance attorneys who live and work here in Arizona are here to help resolve your delayed or denied life insurance claim.

What happens when multiple beneficiaries claim life insurance benefits?

The answer may not be as easy as you think

Many people only maintain life insurance because it is a benefit of their employment. In those instances, coverage is often so automated that the insured rarely thinks about their policy at all. In fact, they may only remember that they have a life insurance policy when the insurer contacts them to ask for information or offer details about coverage.

Such was the case for a Kentucky gentleman named Mark. Mark received a $100,000 life insurance policy through his employer. At the relatively young age of 48, life insurance was not a big concern to Mark. He planned on living a full life and never anticipated that anyone would be fighting over his life insurance proceeds for decades to come.

Life had different plans for Mark, however. His case is a cautionary tale for all of us that – regardless of age – we all need to plan for what happens to our estate when we pass. As lawyers who specialize in contesting the denial of life insurance claims, we see situations like Mark’s all the time. Consequently, this article focuses on his case and how, if he had just done some additional planning, he could have saved his loved ones a lot of stress and consternation.

Setting up his policy

As noted, Mark was a 48 year-old man living in Kentucky. Mark had a great job as a civil engineer, had a full roster of friends, and a family who adored him. In 2014, right around the time he accepted a new position with a regional engineering firm, Mark was dating a woman named Olivia. Everyone who knew the couple knew that he was smitten.

Consequently, when it came time for Mark to fill out his new employee paperwork, he had Olivia on his mind. One of the things Mark had to do was to complete enrollment in the firm’s group life insurance plan. As part of that process, he was asked to name a beneficiary of his life insurance proceeds. At the time, naming Olivia as his beneficiary was a no-brainer for Mark. He loved her and even planned to marry her in the near future.

Unfortunately, things didn’t turn out as Mark had hoped. Over the course of the next year, the couple started fighting regularly and, by the time they broke up in November 2015, they basically couldn’t stand one another.

In July 2015 – just months prior to his breakup with Olivia – Mark received an email from his life insurance company. It was the one-year anniversary of his employment with the engineering firm and, as such, they needed him to update his policy information. To facilitate the process, they provided Mark with a link to the company’s website where he could input any new information easily.

One of the things Mark was asked to do was update his life insurance beneficiary, to the extent he wished to make a change at all. In the midst of his relationship struggles with Olivia, he simply left that question blank. It never occurred to Mark that that simple decision would have such a massive impact on the people in his life.

Who is the intended beneficiary?

Unfortunately, Mark was completely unaware that he had very little time left on the planet. In December 2015, Mark died in his sleep of an apparent brain aneurysm. Mark’s employer notified the life insurance company of his death, hoping to facilitate a fast payout of the death benefit for Mark’s chosen beneficiary.

When insurance company representatives reviewed the file, however, they were at a quandary for what to do. Mark had clearly named Olivia as the beneficiary in his 2014 paperwork. In 2015, however, he left the question about his beneficiary blank. According to the policy terms, any time an insured failed to name a beneficiary, the death benefits would simply be paid to his next of kin. In Mark’s case, that was his sister, Linda.

Sure enough, both Olivia and Linda ended up submitting claims for Mark’s $100,000 death benefit. Unsure of who to pay, and not wanting to incur double liability, the insurance company initiated what is known as an “interpleader” lawsuit. In an interpleader action, the insurance company essentially recognizes that it has to decide between two claimed beneficiaries, and asks for the court’s guidance in determining who should receive the policy payout.

Within that action, Olivia and Linda fought each other hard. Importantly, however, Linda hired an attorney who specializes in contesting life insurance claim denials. While Mark’s insurance company hadn’t denied her claim yet, she realized that without specialized representation, she was at risk of a full denial.

Linda’s attorney presented ample evidence to support her claim for benefits. In particular, he noted Mark’s intentional refusal to name a beneficiary in 2015 – and contrasted that with his desire and willingness to name Olivia as the beneficiary a year earlier. The attorney also pointed to the clear policy language directing the life insurer to pay the policyholder’s next of kin in the event he died without a named beneficiary.

For her part, Olivia presented evidence regarding the deep and intense relationship that she had shared with Mark. She argued that in light of their recent breakup, Mark still would have wanted her to receive the policy proceeds.

Ultimately, the court sided with Linda, as her attorney made arguments centered on law and the policy language, as opposed to arguments based solely in emotional appeal. The court ordered the life insurance company to pay the full $100,000 benefit to Linda, with interest.

These sorts of disputes are more common than you might think. If you believe you are the rightful beneficiary to life insurance proceeds but find that someone else is also claiming that right, call us. The sole focus of our practice is life insurance claim denials. We’ll evaluate your case honestly and if we believe you are the intended beneficiary, we’ll fight for your right to receive the benefits your loved one intended for you. Call us today. We’re here to help.

Arizona denied life insurance claims are nothing new. Existing for many years, life insurance policies have been used to safeguard families and friends alike in case emergencies or accidents come unexpectedly. Unfortunately, denials of life insurance claims, as well as delays, are commonplace.
Our life insurance lawyers who live and work in Arizona can help, whether you are in: Phoenix; Tucson; Mesa; Chandler; Glendale; Scottsdale; Gilbert; Tempe; Peoria; or anywhere in the state of Arizona, we will get you the benefits to which you are entitled.
Arizona Life Insurance Law
Policies through work are governed under ERISA. The primary regulating force here in Arizona is Title 21 of the Arizona Revised Statutes, and oversight is provided by the Arizona Department of Insurance.
Most Common Reasons for a Denied Life Insurance Claim in Arizona
  • 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.
Rescinding a life insurance policy is not a sure bet for denying a claim
What if the insurer knew or should have known about a misrepresentation in the insurance application?
Through the years, we have seen life insurance companies use every trick in the book to deny death benefits. One of their most powerful tricks relies on the human inclination to make others think our lives are better than they really are.
In fact, if you’ve participated in social media over the last decade, you’ve seen this phenomenon first-hand. There’s the couple that incessantly brags about how happy they are – until one day they announce they’re getting a divorce. Or there’s the person who uses a seven year-old profile picture because they don’t want friends to see how much weight they’ve gained. The truth is, nobody wants to publish their failures.
People have this same proclivity for painting a rosy picture when they apply for life insurance. For example, maybe they vastly understate their weight on the application. Perhaps they claim they don’t have more than two alcoholic drinks a week, when in fact they have wine with dinner every night. Others may deny having mental health issues when they are actually overwhelmed with anxiety.
The possibilities are endless and, most times, the applicant has less of an intent to deceive than a desire to be perceived by others as happy, healthy, and well-adjusted. Life insurance companies know this. Indeed, they often discover inconsistent or questionable information in an application. Nonetheless, they approve the application and collect premiums from the policyholder for years on end.
When the policyholder dies, however, the life insurance company enacts one of its biggest scams. Specifically, in processing a claim for death benefits, the insurer will go over all of the policy documents, including the original application, and suddenly discover massive discrepancies between the information given in the application and the policyholder’s true life circumstances.
At this point, the life insurance company will claim that the insured made “material misrepresentations” in the application. Because of that, they claim an absolute right to rescind the policy. Rescission is legalese for “pretending the policy never existed at all.” Once they make this determination of the right to rescind, they deny the claim and hope the beneficiaries go away. We see this all the time. In fact, it has become a very popular denial strategy by insurance companies and their lawyers over the last several years.
Some courts have had enough of the rescission scam
The Ninth Circuit Court of Appeals has seen enough of this deceitful practice. In the 2017 case of Star Insurance Co. v. Sunwest Metals, Inc., the court held that and insurance company “may not blindly ignore evidence of misrepresentation, collect premiums, and then opportunistically rescind once a claim is filed.”
Instead, the court put the onus on the insurance company to sniff out any perceived inconsistencies in the insurance application at the time the application is submitted. This means that innocent misrepresentations will be investigated and remedied long before a death benefit claim is initiated. There are a lot of ways this could play out.
For example, if an applicant claims she has no history of diabetes, yet her medical history reveals prescriptions for insulin, the insurance company would have to investigate that inconsistency before issuing a policy and collecting premiums. Likewise, if the applicant claims to be a non-smoker, yet blood tests reveal a small amount of nicotine in the person’s system, that too would need to be investigated. Additionally, insurance companies cannot simply ignore an application that is not filled out completely. Rather, they must insist that they get all pertinent information during the application process.
In fact, the 9th Circuit went so far as to say the insurance company has a duty to make this level of investigation at the application stage. In essence, the court said that insurers can no longer rescind policies based on alleged material misrepresentations if they knew or should have known the application was incorrect. In other words, if they could have discovered the misrepresentation with an appropriate investigation at the time the application was submitted, they cannot later seek to rescind the policy when a beneficiary makes a claim.
This case is a huge victory for beneficiaries who have long fallen victim to the rescission scam. It is also good for the life insurance industry overall. Red flags in applications will be dealt with at the outset. And, it doesn’t mean hoards of people will have their policy applications rejected. It may mean that premiums will be set at an appropriate level and fewer claims will be denied during a time that is already difficult for beneficiaries.
Buyer beware
Of course, one court case out of the 9th Circuit is not going dissuade insurance companies from a practice that has been very lucrative for them over the years. We still see life insurers try to rescind policies at the time a death penalty is claimed on a regular basis.
Remember that life insurance companies are filled with lawyers. Those lawyers understand that most laypeople won’t know about the Star Insurance Company case or others like it. Thus, they continue to deny claims and posthumously rescind contracts their insureds have been paying on for years. Unfortunately, it is how they keep their companies profitable.
If you are a beneficiary who has been told the deceased’s policy has been rescinded due to material misrepresentations in the application, don’t despair. Your claim for benefits is not necessarily gone.
What you need to do is get on the phone with an attorney who specializes in the denial of life insurance claims. Make sure the lawyer has handled other rescission notifications and make sure they’ve successfully overcome those tactics.
For years, our sole job has been to fight improper denials of life insurance claims, including in cases of rescission. Please don’t hesitate to contact us if you want to discuss your current situation. We’re here to help.