Denial of a life insurance claim for making bad decisions?
How life insurance companies use little-known exclusions to deny claims
No matter how often a lawyer tells a client that they must read all contracts before signing them, people fail to do so all the time. Whether it is a purchase contract for a new vehicle, an employment agreement, or an insurance policy, people simply get too overwhelmed or bored (or both) with long-winded contracts written in arcane legalese.
Life insurance policies are no exception. They can be dozens of pages long, contain endless fine print, and can be hard to track even for the most seasoned legal professional. Nonetheless, if you want to make sure that your loved ones receive full death benefits when you die, you better get out the magnifying glass and start sweating the details.
The reason we say this is simple – life insurance policies are filled with little-known exclusions. These provisions give insurers a whole host of reasons to deny your claim and to deprive your beneficiaries of a policy payout. To make matters worse, many of these provisions may come as a complete surprise to most consumers.
In this article, we’ll take a look at some of the common denial clauses that policyholders may overlook. We’ll also explore ways to avoid having these exclusions impact your family.
Don’t break the law
For most people, it isn’t hard to avoid breaking the law. Nonetheless, even the most virtuous folks may bend the rules from time to time. For example, maybe you’ve gotten behind the wheel of a car after having one too many cocktails. Or perhaps you’ve gone hunting outside the posted season. Others may have crossed a “No Trespassing” sign on the way to take a breathtaking hike. Perhaps you know someone who has taken a prescription painkiller that wasn’t prescribed to them.
None of these offenses seem like a really big deal in the moment – but if you pass away engaging in any of those activities, it could be a sufficient reason for your life insurance company to deny benefits to your loved ones. This is because most policies contain exclusions allowing the insurance company to avoid paying on a claim if the policyholder dies while engaging in a crime. Some of those exclusions even include misdemeanor offenses. Think about that the next time you’re tempted to engage in one of these seemingly innocent affairs.
Don’t do drugs
Based on the prior section, it should come as no surprise that a life insurance company can deny a claim if the policyholder died while ingesting illegal drugs. In most situations, that activity would be considered a crime, and the insurance company could invoke the crime exclusion to reject coverage.
In other cases, the policy language expressly states that claims will not be paid if the policyholder dies under the influence of illicit substances. In either case, it is rare for an insurance company to pay on such a claim without a fight.
Did you know, however, that a life insurance company might also deny a claim based on a policyholder’s use of legal drugs? For example, if a person died after taking too high a dose of a prescription medication, the insurer may deem the death to be intentional. Coverage could thus be denied as a result of any applicable suicide exclusion.
Moreover, even though marijuana use has been legalized in many states, its use still remains a crime under federal law. Consequently, if a policyholder dies while under the influence of cannabis, the life insurance company may deny a claim for benefits – even in a state where marijuana use is currently legal. While marijuana has not been linked to significant numbers of overdoses or deaths, the mere presence of the substance in one’s body at the time of death may cause a life insurer to deny coverage.
Watch your alcohol intake
In almost every corner of the United States, alcohol consumption by adults is perfectly legal. Notwithstanding this fact, alcohol use can still sometimes serve as the basis for a life insurer’s denial of death benefits.
One situation where this may arise is in the case of an alcohol abuser who fails to disclose the frequency of his alcohol use in the insurance application. Because there are so many chronic diseases that can result from alcohol abuse, an insurance company can deny an application based on what it perceives to be excessive consumption. Failure to disclose regular alcohol use can thus be considered a material misrepresentation in obtaining the policy. As we have discussed in other posts, material misrepresentations can be the basis for an insurance company to avoid its obligations under the policy.
In other cases, policyholders can actually overdose on alcohol while binge drinking. If the policyholder dies during such a binge, the insurer may deny coverage based on a claim that the death was reckless or intentional. The fine print of many policies may exclude coverage even in the case of a reckless (though not intentional) death.
What to do if you have been denied death benefits based on behavior
Let’s face it – insurance companies earn the highest profits when they deny claims. Don’t be surprised if your policyholder’s death is subject to intense scrutiny if any of the above issues are even arguably at play.
Just because your loved one passed away while engaged in these activities, however, does not automatically mean death benefits must be denied. Nonetheless, insurers are masterful at making beneficiaries believe they are not entitled to coverage.
Now is not the time to take matters into your own hands. To the contrary, you need to contact a seasoned attorney who specializes in denial of life insurance claims. We’ve seen life insurance companies raise every possible reason for a claim denial. We’ve also successfully overcome most of those issues for our clients over the years.
Don’t take such matters lightly. We’re here to help. Please feel free to contact us today.
Contact us today if you have a delayed or denied life insurance claim.