Life Insurance Lawyer Delaware

Whether you reside in: Greenville; Dewey Beach; Seaford; Milford; Dover; Smyrna; Newark; or Wilmington; our life insurance attorneys who live and work here in Delaware are here to help resolve your delayed or denied life insurance claim.

Delaware Denied Life Insurance Claims Recently Settled

  • Prudential AD&D policy death not accidental $515,300.00
  • Hockessin ERISA life insurance claim $137,000.00
  • Assurity spouse versus ex-spouse dispute $321,400.00
  • Centerville dispute wife and caregiver $1,070,450.00
  • Milford long delay of policy benefits obtained $108,000.00
  • Riversource interpleader lawsuit plaintiff $253,200.00
  • Banner exclusion for alcohol settlement $119,000.00
  • Greenville Delaware denied life insurance claim $2,550,000.00
  • Americo self-inflicted injury denial $247,000.00
  • Delaware denied life insurance claim $1,000,000.00
  • John Hancock misrepresentation application $125,000.00
  • SGLI change of beneficiary dispute $400,000.00
  • Newark Delaware dangerous activity $350,000.00
  • Dover bad faith life insurance claim $124,000.00
  • Smyrna ambiguous language won $101,500.00
  • Milford divorce court orders settlement $440,000.00
  • Physicians Life prescription drug denial $273,000.00
  • Massachusetts Mutual suicide exclusion $303,200.00
  • VGLI competing beneficiaries resolved $400,000.00
  • Denied life insurance claim Wilmington, Delaware $750,000.00
  • Milford accidental death and dismemberment $200,000.00
  • Travelers Life divorce dispute settlement $430,000.00

Be careful who you trust

If you place ownership of your life insurance policies in a trust, be sure you can trust the trustee

Most people understand the basics of life insurance. A policyholder pays premiums to an insurance company in exchange for a life insurance policy. That policy names one or more beneficiaries who will receive a death benefit payout when the policyholder passes away. In most instances, it is a relatively simple transaction.

In other cases, however, the mechanics of the insurance relationship can be a little more difficult. A perfect example of this complexity arose in a recent court case out of Nebraska. This article discusses the details of that case, and serves as a good reminder that sometimes complexity is not the best course for estate planning.

A life insurance policy held in trust

In the case at issue, a 38 year-old woman named Marilyn lived with her three children, all of whom were under the age of 10. Despite her youth, Marilyn felt it was extremely important to engage in some thoughtful estate planning given that her husband had unexpectedly passed away a few years earlier at the age of 36.

Marilyn knew that a sound life insurance policy would be the best way to financially protect her children should something happen to her. Because her kids were so young, however, Marilyn had reservations about obtaining a life insurance policy that named her minor children as direct beneficiaries.

After speaking with her insurance broker, Marilyn obtained a life insurance policy worth $3 million. She paid the premiums on that policy but transfered ownership of the policy to a trust. Not knowing many people in town, Marilyn appointed a friend’s accountant as the trustee of the trust.

Among other things, the trustee was charged with making sure the policy remained in good standing. He was also responsible for administering the life insurance proceeds to Marilyn’s children if she were to die before they were 18. This all seemed to make sense to Marilyn given that she really had no one else to look out for her children’s best interests.

An untrustworthy trustee

Marilyn remained responsible for paying the policy premiums during her lifetime. Always diligent, Marilyn had her computer remind her each time the annual premium of $150,000 came due. At that time, she would mail a check for the premium amount to the trustee. He would then make payments to the life insurance company on behalf of the trust.

This all worked well for a couple of years. Marilyn made payments to the trustee and he paid the insurance company. In the third year of the policy, the trustee was undergoing personal financial difficulties. When he received Marilyn’s premium payment check that year, he deposited it in his personal account, just as he had done in the past. Rather than immediately turning around and making a like payment to the life insurer, however, the trustee instead held on to the funds for his own use.

Once the premium payments were past due, the life insurance company began sending delinquency notices. At first, these were simple overdue reminders. Next, the insurer began to warn that the policy would be cancelled if payment was not received within 30 days. When no payment was forthcoming, the insurer issued a notice of termination giving the insured the opportunity to reinstate the policy by making the account current within 60 days.

Unfortunately, all of these notices were sent to a P.O. Box that had been set up by the trustee for the sole purpose of administering Marilyn’s trust. Once the trustee started embezzling funds from the trust, however, he also stopped checking the mail that came into that address. The life insurer even sent some of the correspondence via certified mail but none of it was ever signed for or picked up from the post office.

A coverage conundrum

Tragically, Marilyn was killed in a car accident during what would have been the fourth year of the policy term. Her children, now without parents, were placed in the care of a distant relative named Tony. Fortunately, Tony had the foresight to search Marilyn’s effects for evidence of a life insurance policy or other funds that might assist with raising Marilyn’s three children.

Not surprisingly, Tony found evidence of Marilyn’s life insurance policy among her papers. He quickly contacted the insurance company to inquire about making a claim. That’s when he learned that the policy had been cancelled due to nonpayment of premiums. He also learned of the arrangement with the trustee at that time. The insurance company outright refused to entertain any claim for death benefits that Tony might submit. He had no idea what to do.

At that time, Tony contacted an attorney who specializes in the denial of life insurance claims. After reviewing all of the evidence at hand, the attorney decided Tony, on behalf of Marilyn’s minor children, should sue the trustee and the insurance company. The theory of the case against the insurance company was that it had constructive knowledge that no one was receiving the delinquency notices regarding the policy given that its certified letters on that issue were never picked up.

After a prolonged trial, the court sided with Tony and returned a verdict against the trustee and the insurance company. Although that was a great outcome for Tony and for Marilyn’s children, the case was not an easy one to win and very easily could have been decided in the insurance company’s favor.

The moral of this story is twofold. First, if your estate is so complex that documents such as life insurance trusts need to be created, you must make sure you can trust the people charged with administering the estate. Additionally, any time you receive a life insurance claim denial, it is best to contact an attorney who specializes in those matters. Our firm does just that day in and day out. If you have a claim denial that needs to be sorted out, call us today. We’re here to help.

Delaware denied life insurance claims are nothing new. Existing for many years, life insurance policies have been used to safeguard families and friends alike in case emergencies or accidents come unexpectedly. Unfortunately, denials of life insurance claims, as well as delays, are commonplace.
Our life insurance lawyers who live and work in Delaware can help, whether you are in: Wilmington; Newark; Smyrna; Middletown; Dover; Milford; Seaford; or anywhere in the state of Delaware, we will get you the benefits to which you are entitled.
Delaware Life Insurance Law
Policies through work are governed under ERISA. The primary regulating force here in Delaware is Title 18 of the Delaware Code, and oversight is provided by the Delaware Department of Insurance.
Most Common Reasons for a Denied Life Insurance Claim in Delaware
  • Number one is a misrepresentation on the application. This typically involves failing to disclose a medical condition. However, we can get over this hurdle the majority of the time.
  • A lapse of a life insurance policy is probably second most common. What happens is that the insured gets sick and misses a payment or two. These are tough, but often we can get these claims paid.
  • Probably third is the type of death exclusion. This could be a suicide or it could be a self-inflicted injury. Murder is another exclusion. Health again can fall under this exclusion. We often win suicide exclusions as we cite case law that the death was actually accidental.
  • A very common exclusion is the alcohol exclusion. The insured may have been killed in a car crash, but the autopsy revealed alcohol in the person’s system. We have many legal briefs to combat this exclusion.
  • Heroin and opiates or illegal drug exclusion is one of the biggest now. With the opioid crisis, there are tens of thousands of deaths.
  • Prescription drug overdose exclusion may involve an overdose of medicine or taken medicines that are contraindicated.
  • An ex-spouse being cut off from life insurance benefits is a big one. We actually have a half dozen ways to get over this hurdle.
  • Having a spouse not listed as a beneficiary is another reason for denial
  • Having a child not listed as a beneficiary is one too.
  • Having only a primary beneficiary who is deceased is another.
  • On an AD&D (accidental death and dismemberment) life insurance policy, a fall not being considered an accident is extremely common.
  • The insured’s age not being correct on the initial application is a reason for denial.
  • Having the wrong social security number listed is common.
  • An autoerotic asphyxiation exclusion is an easy one for us to beat.
  • An omission on the application is a big reason for denying a life insurance claim, but we have legal briefs to this effect.
  • Not providing the required documents to the insurance company after death is a reason.
  • Information which is argued to not be correct is one.
  • When there is a dispute between two or more beneficiaries, an interpleader may occur, and we always get these resolved quickly.
  • A beneficiary not named is a reason for not paying it out.
  • A life insurance policy may be transferred from one company to another by the employer which causes major problems.
Why you need an attorney specializing in life insurance claim denials
If you have ever made a claim against an insurance policy – whether that policy was one for health, auto, business, or anything else – you know that insurance companies are never eager to pay claims. The truth is, they more they have to pay out, the lesser amount of profits they have at the end of the year. Therefore, they put a lot of time, effort, and human resources into the business of denying claims.
In fact, insurance companies are one of the largest employers of attorneys in the United States. These lawyers are paid a lot of money to craft confusing policy language, create colorful reasons for denying coverage, and then litigate claim denials in court. Life insurance companies are one of the biggest offenders. They hire armies of attorneys whose sole purpose is to deny beneficiaries the death benefit that was intended for them.
This is precisely why it is so critical for consumers to retain a specialized attorney any time they are faced with the denial of a life insurance claim. Below we review some of the most common reasons that life insurance companies deny claims. Importantly, our firm has vast experience in successfully contesting such denials.
Material misrepresentations
In most instances, a person seeking life insurance has to go through a fairly extensive application process. Depending on the insurer, an applicant might have to answer a series of health-related questions, undergo a physical examination, and even disclose various personal hobbies.
All of these inquiries are aimed at determining a person’s insurability and, relatedly, the amount of monthly premiums they will have to pay to become and remain insured. Many people fail to realize just how seriously life insurers take the application process.
For example, if you claim on your application to be a non-drinker, but later die of alcohol-induced liver failure, that original mistruth may result in your beneficiaries’ claims being denied. While that example may be understandable, life insurance companies have denied claims in much more questionable circumstances. Using the same example, an insurer might deny a claim if it found a social media picture of the policyholder at a cocktail party before his death.
Even if that policyholder did have the occasional drink prior to his death, the misrepresentation of being a non-drinker is likely not material. Hence, the denial of his beneficiaries’ claims on that ground should be contested.
Period of contestability
Most life insurance polices have a built-in “period of contestability” that is typically around two years long. What that means is that if the policyholder dies within the first two years that the policy is in effect, the insurance company reserves the right to deny the claim on the theory that something must have been wrong with the insured at the time he obtained the policy.
We’ve seen the period of contestability used by insurance companies repeatedly in instances where a person truly did not know they were sick at the time of applying for life insurance, but then died of a serious disease within two years of their application. Insurance companies basically presume that the person must have known they were sick and therefore lied in order to obtain the policy.
Logic dictates that this presumption be dismissed. People do contract unexpected illnesses. They can die of a heart attack suddenly and without prior warning. In fact, thousands of people die from simple cases of the flu each year. Nonetheless, life insurance companies love to raise the period of contestability as a reason to deny valid claims. If this happens to you, it’s time to contact an attorney specializing in the denial of life insurance claims.
Revised cause of death
Anyone who has ever watched a crime drama on TV knows that a county coroner is responsible for performing autopsies and determining a cause of death. Most people think that determination is the final word on the issue. That is not necessarily true with life insurance companies, however.
We have seen life insurance companies change rulings of “accidental death” to “suicide” just to try to avoid paying on the claim. Sometimes, they do this in cases where the policyholder dies in a car accident. The insurance company, acting in the capacity of a mind reader, will simply determine that the policyholder must have intended to harm himself, based on speed, driving conditions, etc. These revised causes of death are pure fiction and should typically be contested by the beneficiaries.
Lapsed policies
There are several reasons why a life insurance policy could lapse. Sometimes it is an employment benefit and coverage ends when the job ends. Other times, people simply can’t make their premium payments for a period of time. All too often, we’ve seen policyholders die shortly after these gaps in payment. Of course, the insurance company jumps at the chance to avoid paying a death benefit.
Once again, however, the insurance company’s denial may be premature. Life insurance policies don’t just end when the policyholder misses a payment or two. Rather, the insurance company is required to give notice of default, a period of catch up on payments, and written notice of the intent to cancel the policy. If that last step hasn’t happened, there’s a good chance the policyholder was still covered at the time of death.
The common theme across all these scenarios is that life insurance companies will do everything they can to avoid paying claims. Remember, there are throngs of lawyers working on their side to deny benefits. It is wise that you don’t go into such a dog fight alone.
Instead, call an attorney who specializes in life insurance claim denials. We deal with these companies (and their lawyers) every single day. We know their tricks and we know how to beat them at their own game.
It is important that you not delay contesting a denial for too long, as too great a delay could jeopardize your case. Call us today. We’re here to help.