Insurance companies market their products in a way that is very appealing to consumers. Thus, American General Life Insurance Co. markets its life insurance policies as protection for the hopes and dreams of American families. Many people rely on such promises when they decide to buy a life insurance policy. It is not uncommon , however, for the carrier to deny the beneficiary death benefits after the policyholder dies.
Read about life insurance fraud
In a recent case, a widow tried to collect death benefits when her husband died. The insurer cancelled his life insurance policy and refused to pay his widow the $250,000. The man's premiums were paid up and there was no fraud suspected. The widow was the sole beneficiary and the man's illness was diagnosed months after he took out the policy. Nevertheless, the insurer informed the widow that the problem was that her deceased husband's application for coverage was incomplete. The insurance company decided that conditions weren't disclosed. What is surprising is that her husband's doctors confirmed he did not have those conditions. After a long legal battle, the widow settled with the insurance carrier for an undisclosed amount.
In general, life insurers make good on policies, paying around $40 billion a year in death benefits on individual policies. However, what happened to this widow was not unusual. The claims of thousands of beneficiaries are denied or disputed every year — many for allegedly flawed applications. According to a recent study, denied insurance claims have tripled to 600 million each year.
Insurers can dispute claims for a number of legitimate reasons including fraud. But the main reason, accounting for about two thirds of disputes, is material misrepresentation - failing to disclose information that insurers deem important in assessing risk, and it allows insurers to rescind coverage altogether. To stop abuses by insurers, most states banned limitless rescissions, but in some states, they are allowed during the two years immediately after a policy is signed. Many insurance companies seize on flaws after claims are made that they could have looked for before issuing coverage. Many carriers rush applications through in order to gain premium income without taking time to screen the risks, then use rescission to control payouts and increase profits.
If your life insurance claim has been delayed, contact a life insurance claim law firm immediately. It takes longer to recover death benefits after the claim is denied. An experienced life insurance attorney can fight the insurance company on your behalf and recover the life insurance proceeds to which you are entitled as soon as possible. If you need an aggressive attorney represent you, contact our life insurance attorneys for help.
Bankers Life and Casualty Co. agreed to pay over three million after, an examination revealed it's fraudulent practices involving its claims. In addition to the more than three million dollar fine, Bankers Life and Casualty Co. will pay $800,000 to the lead regulators on the case for costs related to the re-examination. Regulators conducted a market examination report on Bankers Life and Conseco Senior Health Insurance Co., its former sister company. At that time, authorities found that pending claims were not investigated in a timely manner and that claim files were not properly documented or kept.
As part of the recent settlement, regulators required certain corrective actions for the companies to take. In that agreement, insurance officials also said they would conduct a re-examination of Bankers Life. In 2010, Bankers Life still hadn't revised its procedures to ensure that claims were paid and that claim investigations were completed in a timely manner.
Bankers Life also failed to update its underwriting practices to ensure complete and accurate applications, and the insurer did not revise its maximum-benefit claim denial letters to include details of a restoration of benefits provision in the contract. Authorities in Pennsylvania indicated that the noncompliance had an impact on the carrier's annuities, long-term-care insurance and life insurance businesses. The company neither admitted nor denied the regulators' findings.