Life Insurance Lawyer Illinois

Whether you reside in: Cicero; Elgin; Peoria; Springfield; Naperville; Joliet; Rockford; Aurora or Chicago; our life insurance attorneys who live and work here in Illinois are here to help resolve your delayed or denied life insurance claim.

COVID-19 UPDATE: Our Illinois life insurance attorneys are now handling numerous COVID-19 Coronavirus denied life insurance claims.

How life insurance companies capitalize on mistakes

Be careful when you fill out your life insurance application

It shouldn’t come as a surprise that consumers are expected to be truthful when they are filling out applications for life insurance. Indeed, life insurance companies rely greatly on such information when deciding: (a) whether to issue a policy to the applicant at all; and (b) if so, what price the premiums should be set at. After all, life insurers would never make money if they charged every person the same amount in premiums.

This makes perfect sense from a business perspective. People with significant health risks (think smokers, older individuals, or people with serious illnesses) have to pay higher premiums. This is because they are statistically more likely to die sooner than younger, healthier individuals. Given that this balance of risks is so imperative to the relationship between the life insurer and the policyholder, life insurance companies can sometimes avoid paying out policy benefits if they discover that an insured lied during the application process.

But what happens if the applicant makes a mistake in the application? How does this impact the insurer’s responsibility to pay a death benefit when that policyholder dies? One recent case provides guidance for how courts would handle that sort of situation.

Entering the wrong age on a life insurance application

The case at hand involved a woman named Sue. Sue was a human resources executive for a large electronics manufacturer. As such, she received a generous benefit package that included life insurance policies for Sue, her husband, and any of her children (including adult children if Sue paid extra premiums).

Always a planner, Sue took out policies for the whole family. This included Sue’s 32 year-old daughter, Miranda. Miranda was recently divorced and had two small children to care for. It was Sue’s hope that the kids would receive the $350,000 death benefit if anything ever happened to their mother.

The insurance applications were not terribly detailed. They basically asked for each insured’s name, age, residence address, and some general information about smoking, drinking, and drug use. Sue filled out the application for each member of her family, and simply asked them to “sign on the bottom line” when she was done.

Sue was in a big hurry when she filled out the application forms. She also had a slight case of a condition called dyscalculia. Dyscalculia is very similar to dyslexia, except sufferers get numbers mixed up instead of letters. Sue mostly had her condition under control, but every now and again she had a slight hiccup.

It turns out that Sue may have experienced one of those hiccups when she was filling out the life insurance application for Miranda. On the line that asked for Miranda’s age, Sue wrote “23,” when in fact Miranda was 32 at the time the application was submitted. Miranda did not notice the mistake when she signed off on the application. Likewise, no one at the life insurance company noticed the mistake, even though elsewhere on the form, Sue correctly stated Miranda’s date of birth.

Thereafter, policies were issued for everyone in Sue’s family and premiums were faithfully paid.

An unexpected demise & surprising turn of events

Three years later, Miranda was killed in a tragic boating accident. The whole family was devastated. Nonetheless, Sue managed to get it together just enough to file a claim for death benefits from the life insurance company on behalf of Miranda’s children. As part of that process, Sue was required to submit a copy of Miranda’s death certificate.

Not long after the claim was submitted, Sue was shocked to receive a claim denial letter in the mail. Not only that, the insurance company filed a lawsuit asking the court to rescind the insurance policy it had issued on Miranda. In its pleadings, the life insurance company claimed the policy was based on a lie – specifically, that Miranda stated she was only 23 at the time the policy issued when, in fact, she was 32. The insurance company claimed that had it known Miranda’s true age, it never would have issued her a policy.

Faced with a lawsuit that basically accused her of fraud, Sue furiously sought out a skilled attorney. On the recommendation of a local law professor, she ended up with an attorney specializing in the wrongful denial of life insurance claims.

Fighting materiality

The attorney immediately recognized that the insurance company was simply playing one of the regular games life insurers play to avoid paying death benefits. Specifically, the company was trying to make a simple and innocuous mistake on the application into a “material misrepresentation” that justified the denial of an otherwise valid claim.

To counteract those games, the attorney made two key arguments: (1) there is not a statistically significant difference in the risk of death between 23 and 32 year-olds; and (2) given that Sue correctly put Miranda’s date of birth on the application, the insurance company had reason to know Miranda’s true age when it issued the policy.

Ultimately, the court agreed with Sue’s attorney and ordered the insurance company to pay Miranda’s children the full death benefit, plus interest. Of particular importance to the court was the fact that the insurance company collected premiums for years without ever questioning the discrepancy on the application surrounding Miranda’s true age. Only when she died did the company claim that discrepancy was material to its business.

There are a couple things to be learned from Sue’s case. First, you can never be too careful when it comes to filling out life insurance applications. Secondly, just because a life insurance company denies a claim for benefits does not mean that decision is correct.

If you are facing a similar situation with a life insurance claim denial, please call us. Contesting wrongful denials of life insurance policies is our principal focus and we would be happy to help you get the benefits your loved one intended for you.

Illinois 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 Illinois can help, whether you are in: Chicago; Aurora; Rockford; Joliet; Naperville; Springfield; Peoria; Elgin; Cicero; or anywhere in the state of Illinois, we will get you the benefits to which you are entitled.
Illinois Life Insurance Law
Policies through work are governed under ERISA. The primary regulating force here in Illinois is the Illinois Insurance Code, and oversight is provided by the Illinois Department of Insurance.
Most Common Reasons for a Denied Life Insurance Claim in Illinois
  • 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.
How pre-existing conditions impact life insurance claims
Understanding legitimate and bogus denials of coverage based on pre-existing conditions.
When it comes to the phrase “pre-existing condition,” many people think of the health insurance market. We’ve all heard stories about a person who survived a cancer battle only to be denied health insurance the rest of their lives because of that battle. The justification typically offered by the health insurance companies is that the likelihood of subsequent illnesses makes covering that person too risky (i.e., costly). Of course, there have been widely-publicized and highly-controversial legislative efforts to deal with this issue.
What we tend to hear less about, however, is how pre-existing conditions impact life insurance. Logically, it’s easy to understand how a life insurer would need to consider pre-existing illnesses in making coverage decisions. Ultimately, life insurance is a gamble. The life insurance company sets your premiums at a certain level, effectively betting that you will live long enough (while paying those premiums) to justify paying out a large death benefit when you pass away.
If your medical history shows issues with things like cancer, heart disease, diabetes, or lung disease, the life insurance company (to the extent they will cover you at all) charges greater premium amounts. In essence, the company is betting that you will die sooner than someone without those pre-existing conditions, and thus they have to charge you higher premiums to cover their “bet” on your life.
At a base level, we can all understand the math. That said, when it comes to pre-existing conditions, life insurance companies have an arsenal of tricks and games that they use to deny coverage to perfectly deserving beneficiaries. In this article, we’ll discuss instances where life insurance companies can legitimately deny death benefits based on pre-existing conditions. We’ll also look at those cases where insurers inappropriately rely on pre-existing conditions to deny legitimate claims.
Legitimate life insurance claims denials based on pre-existing conditions
There is one situation in particular where life insurance companies might legitimately deny a claim based on a pre-existing medical condition. The situation is relatively straightforward:
(1) A consumer applies for a life insurance policy;
(2) At the time he makes the application, the consumer has full knowledge that he is suffering from a life-threatening illness such as diabetes or cancer;
(3) The consumer does not disclose (or actively hides) that illness from the insurance company during the application process;
(4) He obtains a life insurance policy at premiums much lower than they would have been if he disclosed his medical condition; and
(5) Within a short period of time after obtaining the policy, the consumer dies of that previously undisclosed condition.
In these cases, it can be reasonable for the insurance company to decline to pay out death benefits to that person’s beneficiaries. This is because a life insurance policy, at its core, is nothing more than a contract between the insurer and the insured. As with any other legally binding contract, a life insurance policy must be based on the truth. To the extent one party makes “material representations” during the negotiation process, a court could find the entire policy to be based on fraud and could uphold the insurer’s decision to deny benefits.
What if misrepresentations are not intentional?
In other instances, of course, a consumer might make an unintentional or less harmful misrepresentation during the application process. That scenario might look something like this:
(1) A consumer applies for a life insurance policy;
(2) At the time he makes the application, the consumer knows he has had a nagging cough and lethargy for about three months;
(3) Because he doesn’t feel that bad, hasn’t needed to miss much work due to these conditions, and hasn’t seen a doctor for them, the consumer doesn’t reveal the conditions on his application;
(4) He obtains a life insurance policy and his premiums are typical for a healthy person in his age range;
(5) Within a short period of time of receiving the policy, the consumer dies of a highly aggressive form of lung cancer.
We’ve seen other scenarios where the applicant had even less reason to believe he had a condition that needed to be disclosed to the insurance company. For example, people can have underlying heart conditions with no outward symptoms and then pass away from a heart attack without any warning whatsoever.
In these cases, you better believe the life insurance company will do everything in its power to try to prove the consumer knew about his pre-existing conditions at the time he applied for life insurance. After all, if the insurer can prove such knowledge, the policy would have been based on fraud, and the company might avoid paying a death benefit.
We’ve even seen insurers go so far as to dig into the deceased’s social media history to see if the person made posts about feeling unwell or suspecting something was wrong with their health. They’ll dig into employment records to make sure the person didn’t have unexplained absences prior to passing away. They might even question loved ones about the extent the insured may have known something was wrong.
In these situations, beneficiaries must retain a lawyer specializing in life insurance claim denials. If the insured truly didn’t know about an underlying condition at the time he applied for life insurance, we can likely overcome the claim denial.
Having practiced in this area of law for several years, we are well-versed in the tricks and techniques life insurers use to intimidate beneficiaries and deny claims. We know that sometimes insurers will delay decisions for longer than they should. Let’s face it, the longer they can hold onto your money without paying a death benefit, the longer that money collects interest in their bank accounts. Meanwhile, legitimate beneficiaries who may desperately need the money are left out in the cold.
If you’re facing denial of a life insurance claim based on an alleged material misrepresentation, please don’t hesitate to contact us. We’re here to help and can get you the recovery you need.