As lawyers who specialize in the wrongful denial of life insurance claims, we’ve seen just about every trick in the book when it comes to a life insurance company trying to get out of paying claims. Sadly, when faced with a life insurance claim denial, many people don’t know that they have a right to appeal the insurer’s decision. In fact, given the profit motives life insurance companies have for denying claims, it is typically a good idea to consider fighting such a decision.
Let’s talk about those profit motives for a minute. Life insurance companies are for-profit businesses. Perhaps ironically, they don't make much money doing what they're supposed to do -- that is, paying out claims to policy beneficiaries. Instead, life insurers make the most money when they collect premiums over a period of years and then concoct a bogus reason to deny a valid claim against a policy.
With that in mind, let's talk about some of the ways life insurance companies deny claims. One thing they love to do is invoke policy exclusions to justify a claim denial. Policy exclusions are basically carve-outs in the life insurance policy that relieve the insurer from paying on a claim if certain circumstances are present at the time of the policyholder’s death. For example, many policies contain what is known as a felony exclusion. That means that if the policyholder dies well committing a felony, the insurance company doesn't have to pay anything.
Of course, most policies contain several exclusions. And, perhaps not surprisingly, most policyholders never read their actual life insurance policy. Thus, they are unaware of the conditions that might cause their insurance to be nullified. One exclusion that ends up being the justification for scores of denials is known as the “drug and alcohol exclusion.” Reasons life insurance won't pay out
Under that exclusion, a life insurance company may be relieved of its obligation to pay out on a claim if the insured died with drugs or alcohol in his system. In most instances, the insured doesn't have to have died as a result of drugs or alcohol. To the contrary, the very presence of drugs or alcohol in one’s system at the time of death can be an excuse for the insurance company not to pay.
This article discusses one case where the insurance company really stretched the bounds of decency in invoking the drug and alcohol exclusion. While we were not surprised by the company's actions, we present this case to illustrate just how important it is to question any claim denial that seems unreasonable or unfair.
A lifelong square attends a party
The case involved a woman named Sally. Sally was in her late 50s at the time that she passed away. She was a wife, a mother, and a devout Christian. In fact, she lived what most people would consider to be a very sheltered life. She never did drugs, rarely drink alcohol, and never even tried a cigarette.
Around the time Sally turned 55, however, her husband Joseph suddenly left their marriage. This was a major turning point in Sally's life. Therefore, she made a concerted effort to join social groups and to attend organized functions as often as possible. In doing this, Sally made many new friends. One friend in particular, a woman named May, was particularly wild by Sally’s standards.
One evening in June, Sally attended a party with May. Much to Sally’s surprise, most of the people at the party were smoking marijuana. Indeed, at one point, Sally was in a room with so much pot smoke in the air that she got light-headed and felt compelled to leave.
An untimely death
Sally took a taxi home from the party. A few minutes into the drive, tragedy struck. Another car veered across the center lane of the highway and struck the taxi head on. Sally was killed instantly. Police conducted a full investigation of the scene and the accident.
Among other things, the police report noted that Sally's clothing had a strong smell of marijuana. The report was ironic given that Sally had lived such a chaste life.
When Sally's adult son, Jesse, submitted a claim to his mother's life insurance company, he never dreamed he would get the response he received. The claim denial letter invoked the drug and alcohol exclusion of Sally's policy. The letter stated that because police had detected such a strong odor of marijuana on Sally's clothing , she had obviously been using drugs on the night she died.
At the suggestion of his father, Jessie contacted a lawyer specializing in the wrongful denial of life insurance claims. It's a good thing he did. The lawyer was able to track down Sally's friend May along with several other people who had attended the same party on the night Sally died. All provided sworn statements recounting the fact that Sally was adamant about not smoking marijuana the night she died. In fact, they said, Sally had appeared downright uncomfortable that other people at the party or smoking pot.
The lawyer also gathered sworn statements from Sally’s lifelong friends -- people who had known her for decades and knew that she had never consumed drugs. Finally, the lawyer obtained a copy of the coroner’s report which made no mention of the presence of any drugs in Sally’s system on the night she died.
All of this evidence was submitted to the life insurer’s internal appeals board, along with a letter stating that Jesse would not hesitate to file a lawsuit against the company if they didn’t overturn the claim denial. Knowing their position would not survive in front of a judge and jury, the insurer acquiesced. It paid Jesse the full policy benefit.If you have had a life insurance claim wrongfully denied, it would be wise to follow Jesse’s lead. Contact our firm today for a full evaluation of your case. If we believe we can get your claim denial overturned, we’ll do everything in our power to make that happen. Call today