Life Insurance Lawyer Kansas

Whether you reside in: Shawnee; Lawrence; Topeka; Olathe; Kansas City; Overland Park or Wichita; our life insurance attorneys who live and work here in Kansas are here to help resolve your delayed or denied life insurance claim.

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

When is a life insurance premium paid “on time”?

A recent case provides guidance on when premium payments are deemed to be made

Life insurance is a very important estate planning tool for many Americans. Essentially, a life insurance policy can mean the difference between financial security and hopelessness when a trusted breadwinner passes away unexpectedly. As such, it is critical for most families to keep their life insurance policies in good standing.

There are a very few reasons why a life insurance company can cancel a valid policy. One of those reasons, of course, is the non-payment of policy premiums. Even in those instances, however, the life insurance company has to give its policyholder ample notice of nonpayment and the opportunity to reinstate the policy in the event payments are so late that the policy lapses.

Unfortunately, it is in the life insurance company’s best interest if the policy does lapse during the policy term. It is not hard to understand why. So long as the policyholder paid premiums for some time, those premiums equate to pure profit if the policy lapses and the insurance company is relieved from ever having to make a policy payout.

Given these circumstances, it is not surprising when life insurers actively try to avoid policy reinstatement efforts. Such was the case with one recent couple on the East Coast. This article explores their plight and also discusses why it is so important to have the right professionals on your side when things go awry with a life insurance policy.

Late payments due to life circumstances

The couple involved in the case at hand were named Harry and Linda. The two had been married for 35 years and were very proactive about estate planning. This was especially true since Linda had spent her entire adult life as a homemaker. If Harry were to die before Linda, he wanted to make sure she had sufficient financial security.

One of the couple’s estate planning strategies was to maintain a large life insurance policy on Harry’s life. For over a decade, the couple was diligent about paying the monthly premiums to keep Harry’s policy active.

In the summer of 2012, however, Harry got suddenly and unexpectedly ill. Doctors weren’t sure what was wrong, but since Harry was unconscious most of the time, they kept him in the hospital for weeks on end. Not surprisingly, Linda was right by his side.

Even after Harry was released from the hospital, he needed months of intense caretaking. Due to what doctors came to believe was some sort of brain aneurysm, Harry had to re-learn how to walk, talk, feed himself, and take care of his most basic needs. Understandably, Linda struggled to keep up with the daily tasks necessary to keep Harry alive.

She also struggled to keep their household together. For months on end, Linda never got around to opening the couple’s mail, even though she kept telling herself she’d get to it. In fact, mail piled up for some six months as she fought to keep Harry alive.

The shock of a cancellation notice

Finally, Harry’s condition deteriorated to the point that he was put into hospice care. While this was a tough milestone for Linda, the additional care Harry was receiving allowed her to try to catch up on household tasks that had been long neglected.

One of the first things Linda did was begin opening her large pile of mail. While she suspected she would find some overdue bill notices, she had no idea what was going on with Harry’s life insurance policy. Essentially, the company had given notice of late payment, given notice of impending cancellation, and finally terminated Harry’s policy. The termination notice, however, gave Harry the chance to reinstate the policy so long as he did so by December 30.

When Linda read that notice, it was December 29. She quickly figured out the full amount of past-due premiums, wrote a check for that amount, filled out a form indicating Harry’s desire to reinstate coverage, and dropped the full packet off at the nearest post office. In that moment, Linda felt lucky she found the cancellation notice in time to save the policy.

Was the policy cancelled?

Just two weeks after Linda mailed the reinstatement paperwork, Harry passed away. Linda quickly submitted a claim for death benefits under Harry’s policy. Much to Linda’s surprise, the claim was denied. The claim denial letter read as follows:

Although we acknowledge that you attempted to reinstate Harry’s policy prior to his death, you did not do so in a timely manner and the policy was never reinstated. The deadline for reinstatement was December 30 and our office did not receive your paperwork until January 3.

Something about this correspondence did not sit right with Linda. She contacted an attorney specializing in the wrongful denial of life insurance claims and read him the letter. The attorney immediately saw the flaw in the insurer’s reasoning. According to state law, it didn’t matter when the insurance company received the reinstatement paperwork. What matters was when the paperwork was deposited in the mail (i.e., postmarked).

In this case, of course, the paperwork was postmarked on December 29 – one full day before the reinstatement cutoff. Linda’s attorney sent a stern letter to Harry’s life insurance company with full citations to relevant law. Within three weeks, the insurer reversed its claim denial decision and issued Linda a check for the full policy amount.

This case is important because it illustrates that life insurers are willing to ignore basic tenants of law if they think they can avoid paying valid benefits. If Linda hadn’t obtained a specialized attorney, she may have walked away from a large sum of money her husband intended for her.

As attorneys who specialize in contesting life insurance claim denials, we witness scenarios like this all the time and we know how to overcome them. If you have received a recent claim denial that you want to discuss, give us a call. We’re here to help.

Kansas 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 Kansas can help, whether you are in: Wichita; Overland Park; Kansas City; Olathe; Topeka; Lawrence; Shawnee or anywhere in the state of Kansas, we will get you the benefits to which you are entitled.
Kansas Life Insurance Law
Policies through work are governed under ERISA. The primary regulating force here in Kansas is the Kansas Insurance Code, and oversight is provided by the Kansas Insurance Department.
Most Common Reasons for a Denied Life Insurance Claim in Kansas
  • 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.
The big business of denying life insurance claims
Why life insurance companies have little incentive to pay claims
When most people seek out life insurance, they do so with the best of intentions. Perhaps they have small children who need to be cared for in their absence. Or maybe they have a spouse who will need to pay the mortgage and all other bills after they pass away. Regardless of the reason, consumers generally believe that obtaining life insurance is a wise and financially sound decision.
Certainly, it can be. What many consumers do not know, however, is that collecting on a life insurance policy can be a highly frustrating experience for beneficiaries. Life insurers are notorious for skewing policy language, invoking loopholes, and coming up with every reason in the book to delay or deny claims. This is an especially egregious practice given that the people submitting such claims are typically grieving from the recent death of a loved one.
As attorneys who specialize in contesting life insurance denials, we’ve seen every trick in the book. Every day, our job is to beat the life insurance companies at their own game and to obtain for our clients the benefits they deserve. We have to be honest, however – very often the insurers put up a heck of a fight before they agree to (or a court orders them to) pay out on claims.
Depending on the facts of each particular case, the process of overcoming an improper claim denial can take months or even years. Therefore, it is not unusual for us to receive these types of questions from our clients:
• Why is the life insurance company taking so long to pay my valid claim?
• Don’t they understand what I’m going through?
• How can they do this to me? I’m grieving and I can’t pay my bills.
We thought it would be a worthwhile exercise to look at the various ways life insurance companies make money – and relatedly, why they might have an incentive to delay or deny payment on even the most valid claims for death benefits.
Collecting premiums
On a basic level, most people understand that consumers have to make payments in order to obtain life insurance policies. These payments, which are made in monthly or annual installments, are called premiums. The amount of premiums that must be paid by any individual policyholder depend greatly on several variables like age, health history, lifestyle, and habits. The more likely those factors combine to make you an earlier candidate for dying than other people, the higher your premiums will be.
Some people wonder how premium payments can possibly be enough to cover the death benefits that life insurers have to make each year. After all, every policyholder will die eventually. How can the insurance companies make money in this scenario? The answer is two-fold.
First, insurance is a numbers game. For simplicity’s sake, let’s say each policyholder pays $10,000 a year in life insurance premiums for a $200,000 death benefit when they die. If the insurance company only insured 10 people, they would collect just $100,000 per year from all policyholders. If only 1/10 people died in year one of the policy, the insurance company would already be operating at a loss of $100,000 (having collected $100,000 in premiums and paying out a $200,000 death benefit). You can easily see how that problem would be compounded as additional policyholders died year after year.
Insurance companies don’t operate that way, however. They may insure hundreds of thousands of people at a time. In fact, insurers purposefully write enough policies so it becomes statistically unrealistic for them to lose money in the “collecting premiums vs. paying claims” game.
Their gains are exacerbated by the second reality concerning premium collections. When insurance companies receive premiums, they don’t just stick them in a bank account somewhere. To the contrary, insurers are heavily invested in stocks, bonds, and interest-bearing accounts. They have scores of analysts who are charged with investing the premiums they receive in manners that will yield the highest returns on investment.
In the above example, if a policyholder pays $10,000 per year in premiums, the life insurance company’s investments might turn that money into $10,500 annually. If you multiply that $500 gain by hundreds of thousands of policyholders, suddenly the pool of money becomes much larger.
How does all this impact claim delays and denials?
So, what does all this math have to do with claim delays and denials? The answer is simple. The more claims the life insurance company denies outright, the more valuable the collected premiums become. Returning to our above example, let’s say a policyholder dies after faithfully paying $10,000 annual premiums for 20 years. Before investments, the insurance company would have collected $200,000 – enough to cover the death benefit.
If, however, the insurer denies the death benefit all together, it then gets to keep the full $200,000, plus any investment amount that accrued through the years. Again, if you extrapolate these numbers across the thousands of claim denials a life insurance company makes every year, you start to see how these companies continually report massive profits. Simply put, the more claims they deny, the more money that stays in their coffers.
That said, no insurer would be allowed to stay in business if it simply made bad faith denials of thousands of claims each year. That’s where their second money-making scheme comes into play – the delayed death benefit. Insurance companies know that if they can come up with a colorable excuse to delay payment on a claim for six months or a year, they’re going to continue to collect interest on previously-paid premiums before spending any money out-of-pocket. Over time and across thousands of policies, these brief investment can equal significant dollars.
After reading all this, you may not believe that claim delays and denials are fair to the consumer. We agree with you. We’ve focused our entire legal careers on contesting bad faith delays and denials. If you’re facing one of these situations, please call us today. We’re here to help.