Life insurance claims can be denied for a variety of reasons, and one common factor is material misrepresentation on the application. Material misrepresentation occurs when incorrect information is provided on the life insurance application, often to secure lower premiums or due to honest mistakes. Sometimes, this can also happen when an insurance agent fills out the application on behalf of the client. Regardless of the reason, material misrepresentation can lead to denied claims down the line, especially if it is discovered after the policyholder’s death.
Insurance companies scrutinize the information provided on life insurance applications and cross-check it against the individual’s medical records and other relevant information. If any discrepancies are found, the insurer may deny the claim. However, beneficiaries should know that there are legal options available to dispute these denials. Consulting an experienced life insurance attorney can help navigate these challenges and ensure that entitled benefits are pursued. For further insight, let’s delve into the contestability period and how it affects life insurance claims.
The Two-Year Contestability Period
A standard feature of most life insurance policies is the two-year contestability period. This period begins the moment the policy is issued, and during this time, the insurance company retains the right to rescind the policy if it discovers any omissions or misrepresentations in the application. If the policyholder dies within the first two years of the policy’s issuance, the insurer can deny the claim, refuse to pay the death benefits, and may only refund the premiums paid.
Once the two-year contestability period expires, the insurer typically cannot contest the policy, regardless of any previous issues with the application. This means that after two years, the insurance company is legally obligated to pay the full death benefit if the policyholder passes away, even if there were inaccuracies in the application.
Life Insurance Bad Faith Practices
Some insurance companies take advantage of the contestability period to deny claims, particularly when there are minor discrepancies related to the insured’s medical history. In many cases, insurers will attempt to use these inconsistencies as an excuse to avoid paying out the claim.
In such instances, our experienced life insurance attorneys often consider the following factors:
Who completed the application? Did the insured fill it out, or did an insurance agent do it on their behalf?
Was the applicant given the chance to review the application before it was submitted?
Was a broker, rather than an insurance agent, involved in completing the application?
If an insurance agent entered incorrect information on the application, and the policyholder had no opportunity to review or correct it, or was assured by the agent that the application was accurate, the insurance company may still be legally obligated to pay the benefits.
It’s essential to evaluate the specific details and facts surrounding each claim. If you believe your legitimate life insurance claim has been unfairly denied, it’s critical to consult a skilled life insurance attorney. Our legal team can assess your case, explore the grounds for contesting the denial, and take necessary actions, including pursuing litigation for insurance bad faith.
What to Do If Your Claim Is Denied
If your life insurance claim has been denied during or after the contestability period, you do not have to accept the insurer’s decision without question. In cases of wrongful denial, you have the right to appeal or even file a lawsuit. An experienced attorney specializing in life insurance disputes can guide you through the process, ensuring that you are treated fairly and receive the benefits that you are entitled to.
When dealing with bad faith insurance practices, it's crucial to have an attorney who can stand up to the insurer and fight for your rights. Insurance companies should honor their contracts, and if they don’t, they should be held accountable for their actions. We are here if you need legal help for life insurance disputes in Nebraska
Conclusion
The contestability period is an essential part of life insurance policies, designed to protect insurers from fraud or material misrepresentation during the first two years of the policy. However, the two-year window does not give insurance companies the right to deny valid claims without scrutiny. If you’re facing a life insurance claim denial, particularly within the contestability period, it’s vital to consult a knowledgeable attorney who can help you navigate the complex process and pursue the benefits you deserve.
Our team of experienced life insurance lawyers specializes in handling contested claims and insurance bad faith cases. If your claim has been denied, don’t wait. Contact us today for a free consultation, and let us help you secure the compensation you’re entitled to.