When it comes right down to it, there are not a whole lot of reasons why a life insurance company can deny a claim. Some of the more common reasons include material misrepresentations in the policy application, a death that falls within one of the policy exclusions, or a lapse in the policy due to nonpayment by the policyholder. Just because a life insurance company denies the claim for one of these reasons, however, does not mean that the claim denial is legitimate.
Even in cases where a life insurance policy has lapsed due to nonpayment by the policyholder, the insurance company is sometimes at fault. In those instances, they may still be obligated to pay out on a claim submitted by a policy beneficiary. That's why it is so important to contact an attorney specializing in the wrongful denial of life insurance claims anytime an insurance company issues a claim denial that doesn't seem fair or right.
This article explorers one recent case where a life insurance company failed to pay a claim based on the policyholder’s alleged nonpayment of premiums. What is particularly tricky about denials received on this basis, is that the beneficiary often has no information regarding the deceased policyholder’s bill paying practices. In other words, they have no way of knowing whether their loved one paid her premiums or not. This case presents a perfect example of that situation.
A life insurance policy obtained out of pure love
The case involved an older woman named Agnes. Although Agnes lived to be in her 90s, she had spent the majority of her life as a single woman. Her only husband, Tom, passed away when the couple was in their thirties. Agnes never remarried, nor did she have any children. One of the greatest joys of her life, however, was her niece , Vicki. Even though Agnes and Vicki lived thousands of miles apart, Agnes was always thrilled to get a chance to talk to her niece.
Back when Agnes was in her 60s, she began paying premiums on a life insurance policy. She didn't really need the policy since she did not have a spouse or any children to support. Nonetheless, she wanted to come up with a way to leave something for her beloved niece when she died. Consequently, Agnes faithfully paid premiums on that policy for over three decades. Through the years, she proudly reminded Vicki that she would receive the policy benefit when Agnes passed.
Eight months before Agnes died, she was forced to move to a nursing home. When she arrived there, one of the social workers helped Agnes with putting her affairs in order. One of the things they did together was notify various people and companies that Agnes had a new address at the nursing home. In fact, they sent an address change notification card to Agnes’ life insurance company.
Sadly, Agnes spent the last several months of her life in a coma. As such, she was unable to diligently attend to her own affairs as she had done throughout her lifetime. To complicate matters, while the life insurance company had received Agnes is notice of new address, the address was entered into the company's system incorrectly. Specifically, instead of listing the address of the nursing home as being in Toledo, Oregon, the insurer listed her address as being in Toledo, Ohio.
A true policy lapse?
While Agnes was in the coma there was no one to pay her bills for her. Consequently, her life insurance policy premiums, which she had paid regularly for over 30 years, went unpaid. As the insurance company is required to do by law, it sent notices of nonpayment to Agnes. Unfortunately, those notices went to an address in Ohio when they should have been delivered to the address in Oregon. In other words, no one who could be of any use to Agnes ever received the notice of nonpayment.
After Agnes passed away, Vicki made a claim for benefits under the old woman's life insurance policy. She was surprised when she received a claim denial letter in the mail a few weeks later. The letter claimed that her aunt had stopped paying premiums, was notified of the nonpayment, failed to catch up on her payments, and therefore the policy was cancelled.
Given that Vicki lived thousands of miles away from her aunt, she had no way of knowing whether the woman had paid the premiums or not. She did know that the insurance policy had been a true point of pride for her aunt and she would have been surprised if she intentionally stopped paying. On a whim, Vicki decided to contact a lawyer specializing in the wrongful denial of life insurance claims to see if he could make any sense of the situation.
The attorney contacted the life insurance company and quickly determined what had happened with the mistaken address in the company’s computer system. Had they input the address correctly, there's a good chance the social worker at the nursing home would have received the notices of nonpayment and made provisions to get the premiums paid.
The attorney next sent a letter reminding the insurance company just how bad it would look for them to refuse payout on the policy of a 90 year-old woman who had faithfully paid premiums to their organization for over 30 years. This was especially true given that the nonpayment happened through no fault of her own.
The insurance company couldn’t deny the P.R. nightmare the situation could have created. Within a matter of weeks, the it overturned its claim denial decision and paid Vicki the money she was owed under her aunt’s policy. Vicki could have very easily decided to give up on her life insurance claim. Fortunately for everyone, she did not.Just because you may have received a claim denial letter in the mail does not mean that you are not entitled to the life insurance proceeds your loved one intended for you. If you want help sorting it all out, please call our firm today. We are happy to help.