When many people think about life insurance, they think all policies are pretty much the same. They may presume, for example, that all life insurance policies prohibit policy payouts in cases involving suicide. Other people assume that a policyholder can only name one rightful beneficiary. The people making those presumptions would both be wrong.
In truth, life insurance policies are incredibly varied. Just because one policy contains a certain provision does not mean other policies will include the same or similar provisions. Nonetheless, insurance companies may try to prey on the public’s ignorance about policy language in an effort to avoid paying legitimate claims.
They do this, of course, because the more claims they can get away with denying, the more money they make. After all, life insurance companies are for-profit businesses. And just like other profit-driven enterprises, they sometimes fail to play fair with consumers.
That is why it is so important to hire an attorney specializing in life insurance law any time you’re faced with an unreasonable claim delay or denial. These experienced attorneys are well-versed in the games life insurers play in an effort to avoid payment and, importantly, they won’t let them get away with it. This article presents one such case where the attorney’s specialized knowledge allowed a life insurance beneficiary to collect on a claim the insurance company was trying to avoid.
A rare SCUBA diving accident
The case involved a woman named Morgan who was in her late 30s. Morgan was employed by the local consulate as an interpreter. One of the benefits of her employment was a life insurance policy worth $350,000. Morgan named her boyfriend Tim as the sole beneficiary under the policy.
Morgan and Tim were avid outdoor enthusiasts. They spent all of their vacation time hiking, backpacking, rock climbing, mountain biking, and doing any other sort of adventure they could find. One summer, the two decided to take a vacation in Hawaii. While there, they decided to join in on a boat charter that would take them SCUBA diving several miles off the coast of Maui. Neither of them had dived before, but the charter company offered lessons that would lead to certification and the couple happily signed up.
Tragically, just days following certification, Morgan had an equipment malfunction that caused her SCUBA tank to discharge all oxygen while she was at the deepest part of her dive. She didn’t have enough oxygen to make it to the surface and ended up dying right in front of the rest of the divers. The whole ordeal was devastating.
Despite his grief, Tim gathered all of the documentation necessary for him to file a claim with Morgan’s life insurance company. He didn’t know the first thing about life insurance, but assumed he would receive a check for the policy amount within a few weeks.
A bogus claim denial
What Tim received instead, however, was a claim denial letter. The claims adjuster stated that they had to deny Tim’s claim because “SCUBA diving is an inherently dangerous activity which [the insurance company] does not cover.” To Tim, who was still reeling with grief, this explanation seemed legitimate. Morgan died while doing something the policy didn’t cover. In his mind, that was the end of the issue.
Fortunately, Tim’s brother David (a lawyer) was there when the claim denial letter appeared in the mail. David knew just enough about life insurance law to know that many policies did exclude coverage if the insured died while engaging in an “inherently dangerous activity.” He also knew that SCUBA diving was frequently categorized as such.
Nonetheless, David had a good friend from law school who he knew specialized in contesting the wrongful denial of life insurance claims. Just for good measure, David called his friend and read him the denial letter. Without hesitation, the other attorney (Mike) told David to fax him a copy of Morgan’s policy. After searching Morgan’s office, Tim and David located the policy and faxed it over to Mike. Within a couple of hours, Mike called them back.
It turns out Morgan’s policy did not contain an “inherently dangerous activity” exclusion. In fact, Morgan had been paying extra for a policy without such an exclusion expressly because she enjoyed so many outdoor sports that were considered “extreme” and “dangerous.” With Tim’s permission, Mike fired off a letter to the life insurance company. In it, he threatened to file a lawsuit not only for breach of contract, but also for bad faith denial of claim. Mike knew the latter claim carried the possibility that the court would impose punitive damages against the insurance company.
Sure enough, within a week, Tim received a check in the mail for the full policy amount, plus interest. While this is undoubtedly a great result, it is frightening to think how close Tim came to walking away from $350,000. To him, the denial letter seemed legitimate and he was willing to drop the whole issue because he assumed the insurance company was operating honestly. Had he not had two lawyers basically at his disposal, Tim would have received nothing and Morgan would have paid premiums on her policy for nothing.
This case is a perfect illustration of why it is important to contact a lawyer specializing in the wrongful denial of life insurance claims any time you are faced with a denial letter. The truth is, many life insurance companies will issue bogus denial letters in hopes that the grieving beneficiary will simply walk away. Every time an insurance company gets away with this tactic, their profits grow larger and larger.
If you have recently received a denial letter from a life insurance company, it’s worth taking the time to call our office to discuss the matter. As with Tim’s case, even though the denial letter may seem legitimate, there may be things about the underlying policy that make you entitled to a payout. Our practice is focused on life insurance law and we’d be happy to help you recover any insurance payout to which you’re entitled.