In years past, life insurance companies used to have a lot more reasons to deny insurance claims against policies than they do today. In other words, they got away with writing in several more “policy exclusions” than modern insurance law allows. A policy exclusion, of course, is a condition that relieves the insurance company from having to pay a claim after its policyholder dies.
By way of example, most life insurance policies of years past included was what known as the “war exclusion.” It basically said that if the policyholder died in an act of war, the life insurer would not have to pay a benefit. Sadly, events like 9/11 could have been considered an “act of war” under such policies – which would have left thousands of Americans without the financial security of a life insurance payout after that tragic event. In recent years, however, most insurers have removed the war exclusion from their policies.
One exclusion that persists is the suicide exclusion. On a base level, you can understand why an insurance company would want to include such an exclusion in its policies. You would never want someone to obtain coverage, pay premium for a scant number of months, and then have their loved ones collect a financial windfall when they took their own life. We handle all denied accidental death claims.
In today’s policies, however, even the suicide exclusion is limited. Specifically, most policies now only deny coverage if the insured commits suicide during the first two years of the policy. At face value, it is an equitable compromise for everyone involved.
In practice, however, life insurance companies exploit the 2-year suicide exclusions with alarming frequency. They do so by declaring an insured’s death a suicide even in circumstances where police and autopsy reports conclude otherwise. They do this, of course, to avoid paying out on costly claims. Any time they can do that, the life insurer ends up a little bit richer at the end of the year.
This article centers on a case where a life insurance company tried to misuse the suicide exclusion in order to avoid paying a claim on a policy held by a guy who had a true zest for life. Fortunately, his beneficiary had the wherewithal to hire an attorney specializing in wrongful life insurance claim denials to overturn the insurer’s faulty decision.
A happy, animal-loving hiker
James was a guy in his late 30s who everybody seemed to adore. He was a wealthy tech executive, he was semi-retired 30 years before most people can even think about it, and he was an avid outdoorsman and animal lover. In fact, James had three dogs that he took hiking all over the United States.
James was also the kind of guy who always had plans. Any time a friend asked, he was up for arranging travel all over the world. At the time he died, in fact, he had trips planned to Italy, Croatia, Thailand, and Guatemala. He was also engaged to be married and was one of those rare grooms who seemed to relish in wedding planning. In short, James was what his friends described as “chronically happy.”
It will come as no surprise, then, that James’ early death was not received well by his family, friends, colleagues, and community.
James was on a trip with his friend John when he died. The two were driving through Yellowstone in John’s van and John had brought along his beloved dog, Blue. The two men were having a blast touring the historic park.
At one point, they stopped to view the park’s famous hot springs. As they gazed in wonder, Blue got off his leash and dove straight into one of the pools. These pools feed off of underground thermal activity and can reach temperatures topping 200 degrees Fahrenheit. Nonetheless, when Blue jumped in the pool, James didn’t hesitate for a second in jumping in after the dog in an effort to save him. Not surprisingly, they both perished.
There wasn’t a single person at the scene who thought James committed suicide. Rather, police reports indicated that everyone believed James was a selfless hero.
A crazy claim denial
James’ fiancé, Kathy, was his sole beneficiary under his life insurance policy. Devastated as she was, she filed a claim with James’ life insurance company shortly after he died. As required, she also submitted copies of all police reports surrounding the circumstances of James’ death. At the time, Kathy had no reason to believe the claim would be denied.
Within a month, however, she received a letter from a life insurance claims adjuster denying her claim. The letter stated that because James’ policy was only a year old, the suicide exclusion was still in place. Furthermore, given the circumstances of his death, the adjuster “could only conclude” that James took his own life. Accordingly, the letter stated, Kathy’s claim had to be denied.
Kathy wasn’t buying it. She immediately contacted an attorney specializing in the wrongful denial of life insurance claims and explained the situation. The attorney immediately knew what was afoot. He had gone up against dozens of life insurance companies over the years who had used this same trick. In an effort to avoid paying a hefty claim (James’ policy was worth $4 million), they would claim suicide even if there was no evidence to support that. Fortunately, the attorney also knew how to beat them at their own game.
He immediately gathered witness statements and sworn declarations from those close to James that illustrated his complete love of life. He was also able to obtain James’ health records over the past decade which showed no indication of depression or suicidal ideation. He packaged all of this into a brief and submitted it to the life insurer’s internal appeals board.
Faced with this overwhelming amount of evidence that contraindicated suicide, and having no evidence of it’s own to support the suicide theory, the insurer had no choice but to overturn its denial.Unfortunately, Kathy’s experience with the insurer was anything but unusual. Fortunately, the right lawyer can overcome such faulty reasoning. If you have had an insurance company deny your claim based on a bogus suicide theory, call us today. If we can possible help, it would be our pleasure to do so.