The Contestability Period in Life Insurance and Claims Disputes
Life insurance claims can be denied for various reasons, and one common factor is material misrepresentation on the application. Material misrepresentation refers to providing incorrect answers on the enrollment form, often done to secure lower premiums or due to inadvertent mistakes. It can also occur when insurance agents complete applications on behalf of clients. These situations may lead to claim denials in the future.
Insurance companies carefully examine the answers given on enrollment forms and cross-reference them with the insured individuals' medical records. If discrepancies are found, the claim is likely to be denied. However, beneficiaries should be aware that there are avenues for disputing such denials based on multiple grounds. Seeking guidance from an experienced life insurance attorney can help navigate these complexities and pursue the entitled benefits. For more information, read about the incontestable period in life insurance.
The Two-Year Contestability Period
Most life insurance policies have a standard two-year contestability period. During this period, the insurance company has the right to rescind the policy if it discovers omissions or misrepresentations on the application, and the policyholder passes away within the first two years of coverage. In such cases, the insurance company denies life insurance claims, refuses to pay benefits, and may only refund the premiums paid. Once the two-year contestability period elapses, the insurance company usually cannot contest the policy, irrespective of application issues, and must pay the full policy amount upon the policyholder's death.
Life Insurance Bad Faith Practices
Often, insurance companies attempt to use even minor discrepancies in the application as grounds for claim denial, particularly within the two-year contestability period involving inaccurate medical history. In such situations, our experienced life insurance attorneys inquire about the following:
- Who completed the application?
- Did an insurance company agent fill out the application?
- Did the applicant have an opportunity to review the application?
- Was the application completed by a broker rather than an agent?
If the agent entered incorrect information on the application and the insured individual had no chance to rectify it or was assured by the agent that the application was accurate, the insurance company may still be legally obligated to pay the policy benefits.
It is crucial to conduct a comprehensive analysis of the specific facts and issues pertaining to each life insurance claim and policy. If your valid life insurance claim has been denied by your insurance company, seeking guidance from experienced life insurance attorneys is essential. They can evaluate your denied claim and advise you on potential recourse, including pursuing litigation for insurance bad faith. Our life insurance attorneys specialize in handling such cases and vigorously fight for the benefits our clients deserve.