One of the great wonders of modern society is that so long as we have the money to travel, we can pick up and go virtually anywhere in the world whenever we want. This is great news for those of us who love adventure. Continents like Africa and Asia that were once considered “exotic,” are now readily available to modern travelers.
You know who doesn’t love the current state of travel? Life insurance companies. To them, foreign travel only increases the likelihood of a policyholder dying at a young age. And, of course, that means they may have to pay out on claims years or decades before they otherwise would. That is bad news for their bottom line.
Consequently, life insurance companies have paid a lot more attention in recent years to the ways in which they can restrict policies so as to avoid payouts for their more adventurous policyholders. They’ve come up with all sorts of restrictions. For example, most policies become ineffective if you travel to a war-torn region. That exclusion, in and of itself, has been problematic for insurers though. They’ve had to fight beneficiaries over things like what it truly means for a region to be “war-torn.”
In recent years, life insurers have sought to bring a bit more clarity to their travel exclusions. Many, for instance, now exclude coverage if an insured travels to any region for which there is a current travel advisory from the U.S. Department of State. Although this seems relatively clear at first blush, battles are still being fought over the precise perimeters of this kind of exclusion. This article explores one such legal battle that centered entirely upon the State Department’s travel advisories.
Just another trip for an adventurous guy
The case involved a man named Ken. Ken was in his early 50s and was known to all of his friends as an adventurous spirit. One of his great loves was traveling the world and he set off to do so whenever he got the chance. Ken was also a successful business man. As such, he had a life insurance policy worth $1,000,000. His wife Lauren was named as the sole beneficiary.
Because Ken was such an experienced traveler, he knew to check the website for the United States Department of State before he booked any trip. He knew the State Department issued tiered warnings if American tourists needed to be cautious about travel to a particular region. A Level 1 warning, for example, advised to “take normal precautions,” while the highest (Level 4) warning simply advised “Do Not Travel.”
Although Ken was not the kind of guy to memorize things like the terms of life insurance policies, he had disclosed in his life insurance application that he was a frequent world traveler. As such, he knew the insurance company required a foreign travel exclusion before it would issue him a policy. The travel exclusion relieved the insurer from paying out on any claim if Ken “knowingly traveled to any country for which the United States Department of State had issued a Level 2 or higher travel advisory.”
In April 2011, Ken booked a trip to Honduras for January 2012. At the time he made the reservations, Honduras was under a Level 1 warning. That travel advisory remained in effect until Ken began his trip. After he had been there for two weeks, however, the State Department raised the advisory to a Level 3 (“Reconsider travel”). Apparently, a rebel uprising against the government had sparked violence in the capital. Since Ken was staying in a small village hours from there and was going home shortly anyway, he didn’t worry too much about the situation.
Perhaps he should have. A week after the travel advisory was raised to Level 3 (and just 2 days before Ken was scheduled to return to the U.S.), a rebel group bombed a bus Ken was on. He died at the scene.
A predictable, yet wrongful, denial
About a month later, Lauren made a claim against Ken’s life insurance policy. Just a few weeks after that, she received a claim denial letter in the mail. The letter claimed that Ken’s presence in a country with a Level 3 travel advisory violated the travel exclusion of his policy.
Lauren was skeptical of that reasoning. She knew Ken had been very careful about heeding the warnings from the State Department. Thus, she contacted an attorney specializing in the wrongful denial of life insurance claims. After she explained the situation, the attorney knew exactly what to do.
First, he reviewed the policy language. To him, it was significant that the foreign travel exclusion required Ken to “knowingly” travel to a country with an advisory of Level 2 or higher. The attorney then contacted that State Department with the exact dates of Ken’s trip. He was able to verify that Honduras remained at a Level 1 advisory until 1 week before Ken was to return home – when it suddenly jumped to a Level 3. In other words, he verified that Ken had not “knowingly” traveled to a country with an elevated threat level.
The lawyer took all of this evidence to the life insurance company’s internal appeals board. After a day-long hearing, they ultimately agreed that Ken had not “knowingly” engaged in travel that would invoke the foreign travel exclusion. Though the insurance company representatives fought to only pay Lauren a portion of the payout due under Ken’s policy, they eventually retreated from that position and paid her the full amount.Having the right attorney when you’re facing a life insurance claim denial can mean the difference between getting paid and getting ignored. Our firm practices exclusively in this area and we’ve successfully contested hundreds of wrongful claim denials. If you’re facing a life insurance claim denial that just doesn’t sit right, please call our firm today. We’ll provide a free consultation and give you an honest assessment about your chances at beating the insurer. Call us today. We’re here to help.