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.
- 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.