We recently recovered a $300,000 denied AD&D claim for our client.
Many factors can invalidate a life insurance policy. The question is whether a life insurance contract has an exclusion. An exclusion is a circumstance -- such as a particular cause of death or an allegation of fraud -- that invalidates a claim.
People who work in the insurance industry insist that it is relatively rare for life insurance companies to fight death claims. However, some insurance companies routinely resist paying claims that take place within the first two years after a policy is written. Unfortunately, many of such claims are small policies and the beneficiaries are not in the position to mount a real legal battle to recover the benefits.
Exclusions are not as prevalent as they used to be. In the past, many life insurance contracts contained exclusions for deaths due to acts of war, commissions of felony or even participation in riots. Some of these exclusions may still survive in group insurance, especially accidental death and dismemberment, or AD&D, insurance. However, the vast majority of life insurance policies include only two exclusions:
1) Death by suicide. This one is pretty straightforward and is intended to prevent suicidal people from taking out a big life insurance policy to ensure their heirs will get a million-dollar payday.
2) Material misrepresentation on your insurance application. This includes any intentional falsehoods or omitting key information that an insurance company would use to decide whether and at what cost to cover you.
In most states, these exclusions only apply for a limited time because of what's known as an incontestability clause. The contract will say that the death claim cannot be denied because of a misstatement of fact after the contract has been in force for more than two years. The only way an insurance company can contest the claim after that is if the company can prove intentional fraud.
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