White collar crime allegations often surface after a life insurance claim is filed, especially when insurers search for reasons to deny high value policies. In these cases, insurers frequently rely on felony exclusion clauses, arguing that the insured died while committing or attempting to commit a felony such as fraud, embezzlement, tax evasion, or money laundering.
Courts do not treat these exclusions as automatic. In white collar cases, the key issues are timing, intent, and whether the alleged crime actually caused the death. The following examples reflect common scenarios where insurers denied claims based on white collar allegations and beneficiaries pushed back.
White Collar Crime Felony Exclusion Disputes
1. Midland National Life Insurance Company Fraud Investigation Felony Exclusion Denial
Case Overview:
The insured was under investigation for a fraud scheme and died in an accidental incident unrelated to the alleged misconduct. The insurer denied the claim, asserting that the insured was committing a felony at the time of death.
Legal Issue:
Whether ongoing fraudulent activity, without a causal link to death, is enough to trigger a felony exclusion.
Challenge Strategy:
Counsel argued that the accident was unrelated to the alleged fraud and that the insured was not actively committing a felony at the moment of death.
Outcome:
The claim resolved through settlement after negotiations highlighted the lack of causation.
Key Takeaway:
Felony exclusions generally require a direct connection between the crime and the death.
2. Globe Life Insurance Tax Evasion Allegation and Stroke Death
Case Overview:
The insured died of a stroke while under federal investigation for tax evasion. The insurer denied the claim, relying on the felony exclusion and alleged nondisclosure of tax liabilities.
Legal Issue:
Whether being investigated for a financial crime equates to committing a felony at the time of death.
Challenge Strategy:
The beneficiary’s attorney emphasized that the cause of death was natural and unrelated to any alleged criminal conduct.
Outcome:
The insurer agreed to a negotiated settlement.
Key Takeaway:
Investigations and allegations alone do not satisfy felony exclusion requirements.
3. Equitable Life Insurance Company Embezzlement Allegation After Heart Attack
Case Overview:
The insured was accused of embezzlement and died from a heart attack. The insurer denied the claim based on the felony exclusion, asserting that the insured was engaged in criminal activity.
Legal Issue:
Whether a financial crime that does not cause or contribute to death can bar coverage.
Challenge Strategy:
Medical evidence showed long standing heart disease unrelated to workplace conduct.
Outcome:
The claim settled after presentation of medical and employment records.
Key Takeaway:
White collar crimes rarely satisfy the causation element required for felony exclusions.
4. Progressive Life Insurance Money Laundering Allegation and Natural Death
Case Overview:
The insured died of a heart attack while allegedly involved in money laundering activities. The insurer denied a $400,000 claim under the felony exclusion.
Legal Issue:
Whether criminal conduct occurring separately from the death event triggers exclusion.
Challenge Strategy:
The beneficiary’s counsel focused on the timing of the death and the absence of any criminal act occurring at that moment.
Outcome:
The insurer settled after reviewing medical causation evidence.
Key Takeaway:
Felony exclusions are not retroactive punishment clauses.
5. American Life Insurance Credit Card Fraud Allegation
Case Overview:
The insured died while allegedly involved in credit card fraud. The insurer denied the claim, asserting that the insured was committing a felony at the time of death.
Legal Issue:
Whether prior or unrelated fraudulent conduct satisfies policy exclusion language.
Challenge Strategy:
Counsel demonstrated that the death was unrelated to any criminal activity and occurred during normal daily activities.
Outcome:
The claim resolved through settlement.
Key Takeaway:
The phrase while committing a felony is narrowly construed.
Why White Collar Felony Exclusions Are Frequently Misused
In white collar cases, insurers often stretch felony exclusions beyond their intended scope. Common problems include:
• Treating investigations as convictions
• Ignoring the timing of the alleged crime
• Failing to prove criminal intent at death
• Assuming financial crimes are ongoing at all times
• Skipping causation analysis
Courts generally require more than suspicion or reputation.
What Courts Focus On in White Collar Felony Exclusion Cases
When these denials are challenged, courts usually examine:
• Whether a felony was actually being committed
• Whether the insured had criminal intent at the time of death
• Whether the felony caused or contributed to the death
• How the policy defines felony conduct
• Whether exclusions are ambiguous
Ambiguities are typically resolved in favor of coverage.
How Life Insurance Lawyers Challenge These Denials
Effective representation often includes:
• Reviewing criminal statutes and policy language
• Examining medical cause of death
• Separating alleged conduct from death timing
• Challenging insurer assumptions
• Negotiating or litigating causation issues
Many white collar felony denials do not survive legal scrutiny.
Frequently Asked Questions
Can a life insurance claim be denied just because the insured committed a white collar crime
Not usually. The insurer must prove the insured was committing a felony at the time of death and that it falls within the policy exclusion.
Does an investigation trigger a felony exclusion
No. Investigations and accusations are not proof.
Do financial crimes count as ongoing felonies
Courts rarely accept that argument without specific evidence tied to the death.
Is causation required
In most policies, yes. The felony must cause or contribute to death.
Should white collar felony denials be reviewed by a lawyer
Yes. These denials are frequently overturned when challenged.