Life insurance companies and life insurance salespeople have one thing in common – they’re both motivated by profits. Consequently, they will often present consumers with what seem like amazing deals at first glance. They do this knowing that most people simply don’t read the fine print of their policies.
Nor do most people obsessively think of ways that policy language can be manipulated to deny coverage. You better believe that’s what the army of lawyers hired by the life insurance companies do, however. The only reason life insurers issue double indemnity policies in the first place is because they believe they can make a profit off of them. They only make a profit if very few claims are deemed to be valid.
This article examines just a few of the ways that life insurance companies misuse double indemnity provisions to: (a) collect higher premiums; and (b) deny valid claims.
What is a double indemnity provision?
Before we get too deep into how insurance companies exploit double indemnity provisions, let’s talk first about what those provisions are. In essence, a double indemnity provision provides that if a policyholder dies as the result of an accident, the insurance policy will pay out double (or sometimes triple) the policy amount.
Thus, for example, if an insured purchases a life insurance policy with a $500,000 payout and they die in an accident, the policy will pay as follows: (a) $500,000 for basic policy coverage; and (b) an additional $1,000,000 under the double indemnity clause. Remember, however, that the double indemnity clause only applies if the insured dies in an “accident.”
Unfortunately, many life insurance policies define the term “accident” in a manner that is far more restrictive than how most of us use it in day to day conversation. For example, double indemnity provisions may provide that the following two circumstances are not “accidents”:
- Deaths that occur in war-torn areas
- Deaths that occur while the insured is engaged in a dangerous activity
Below, we briefly explore a couple of cases where life insurance companies tried to deny double indemnity coverage on each of these grounds.
Death at war
John had a life insurance policy with a double indemnity provision. Among other things, that provision contained an exclusion that relieved the insurance company from paying a death benefit if John died as a direct act of war.
John was a member of the U.S. Marine Corps. He generally understood that his life insurance policy would not pay a benefit if he died during active combat and he informed his wife Jill (also his sole beneficiary) of this limitation.
John thought he was lucky. While many of his colleagues were getting shipped off to places like Iran and Afghanistan, John got a relatively easy assignment to a temporary post in Guatemala. During his stay, however, a small uprising occurred. A band of ten men who were protesting local working conditions raised arms against the U.S. military base. In the midst of the chaos, John was killed when a rebel truck ran him over in a public street.
When John’s wife filed a claim for double indemnity benefits, the insurance company denied her claim outright. They claimed that John was killed during an act of war and was, therefore, ineligible for a double indemnity payout.
In another case where the life insurance company denied a double indemnity claim, a woman named Janine was killed when her motorcycle veered off of a winding country road that she was driving down. Police reports showed she was traveling at approximately 10 miles per hour over the suggested speed limit when she died.
When her husband filed a claim for death benefits under her double indemnity clause, he never dreamed it would be denied. Nonetheless, that’s exactly what happened. The insurance company claimed that driving a motorcycle above the speed limit was an “inherently dangerous activity” that negated Janine’s double indemnity coverage.
The necessity of a specialized lawyer
In both of these cases, the insurance company manipulated policy language in an effort to avoid paying out an expensive claim. Fortunately, in both cases, the beneficiaries hired a lawyer who specialized in the wrongful denial of life insurance claims.
In each instance, the lawyer immediately saw that the insurance company was simply trying to avoid paying out a valid claim. John was nowhere near a “war zone” as it was defined in the policy language. And, while Janine’s policy specifically described “motorcycle racing” as inherently dangerous, there was no evidence that: (a) she was “racing” her motorcycle at the time of the crash; or (b) that driving 10 miles per hour about the posted limit exposed her to unreasonable danger.
Thus, in both cases, the policyholder’s beneficiary was ultimately awarded the death payout their loved one intended for them. Arguably, however, these results only came because there was an experienced lawyer willing to take on the case. All too often, we see beneficiaries who are already distraught by the death of their loved one. When a claim denial letter then comes in the mail, they simply don’t have the will to fight.
That’s where we come in. Our firm does nothing except contest the wrongful denial of life insurance claims. Because we are so highly specialized, we rarely come across an issue that we haven’t seen before. We know the games the insurance companies play and we are more than happy to call them on the carpet with respect to their hardball tactics.If you or a loved one are facing the denial of a double indemnity claim (or any life insurance claim, for that matter), please call our firm today. The initial consultation is free and we’ll give you an honest assessment regarding your chances of overturning the claim denial. If we do take your case, you won’t pay a dime unless and until you recover something from the insurer. Call us today. We’re here to help.