Life Insurance Lawyer New Hampshire
Whether you reside in: Derry; Concord; Nashua or Manchester; our life insurance attorneys who live and work here in New Hampshire are here to help resolve your delayed or denied life insurance claim.
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Life insurance incontestability clauses – 2 years isn’t always the limit
Anyone who is familiar with life insurance knows that many policies include a provision known as the “incontestability clause.” Generally speaking, incontestability clauses provide that if the policyholder dies within the first two years of the policy term, the life insurer can contest any of the representations made in the insurance application in an effort to void the policy.
Let’s say, for example, that a 45 year-old man, Jason, obtained a life insurance policy with a two-year incontestability clause on February 2, 2016. In his application, Jason stated that he had never sought medical advice relating to a heart condition. In truth, however, Jason learned in September 2015 that he had early-stage heart disease. Depending on when Jason dies, that misrepresentation could have drastically different impacts on the effectiveness of his policy.
In the first scenario, imagine that Jason dies in a car accident on January 6, 2017 – less than two years after obtaining his life insurance policy. In that instance, Jason’s insurer would be able to investigate all of the representations made in his application. They might examine medical records or even scour Jason’s social media posts to see if they could catch him in a lie. Here, of course, the insurer would likely find evidence of Jason’s heart condition. Given that the two-year incontestability clause had not lapsed, the life insurance company would almost certainly deny any claim against his policy based on the fact that Jason did not disclose his heart disease – even though his death had nothing to do with that condition.
In the next scenario, picture all of the same facts, except here Jason dies in a car accident on January 6, 2020. Here, his policy has been in effect well beyond two years. Generally speaking, that means that the insurer – even if it discovers Jason’s earlier medical records – has to pay his beneficiaries the death payout he intended for them.
Of course, both of the above scenarios are simplistic. Most claims are not so easily resolved. Insurance companies don’t stay in business (and generate tremendous profits) by indiscriminately paying out every claim that arises after a policy has been in effect for two years. This article discusses some of the most common situations in which a life insurance claim can be denied even after that critical policy period.
Fraudulent medical exam
Let’s stick with the Jason example. In the next scenario, Jason was a little more subversive in applying for life insurance. Specifically, he knew his heart disease was detectable through standard medical exams. Nonetheless, he was highly driven to obtain a life insurance policy so that his wife and kids would have a more secure financial future if he were to pass away.
So, what did Jason do? He hired a guy named Tom to take his life insurance physical examination for him. Tom was about the same height and build, with the same general coloring. The only real difference between the two men was that Tom was balding and in perfectly good health while Jason was neither of those things.
While Jason may have had pure intentions in substituting Tom in during the physical exam, those actions amounted to fraud. Consequently, it wouldn’t matter how many years into the policy Jason passed away, if the insurance company discovered the fraudulent medical exam, it could avoid any and all obligations under the policy.
The beneficiary kills the policyholder
Anyone who has ever spent any amount of time watching TV crime dramas is probably familiar with this scenario. A husband (let’s stay with Jason) takes out a $2 million life insurance policy naming his wife as the sole beneficiary. Jason pays all the premiums necessary to maintain the policy for over five years. During the sixth year, however, Jason winds up dead on the floor of a hotel bathroom with two bullet holes in his chest.
Jason’s wife files a claim with the life insurance policy. At that point, most insurance companies would undertake their own investigation into the circumstances of Jason’s murder. Notwithstanding how many years the policy had been in effect, if there is even a slight chance Jason’s wife was also his murderer, there is no way they will pay out on her claim.
No insurable interest
Finally, a life insurance company will not be bound by an incontestability clause when it finds out the owner of the policy has no insurable interest. This scenario looks a little different from the others. In this circumstance, imagine a young man named Mike who finds out through an online genealogy site that he has a very distant, very elderly, and very wealthy uncle named Jim who lives half way across the country. Without ever meeting Jim, Mike takes out a policy of insurance on his life.
Mike then watches the obituaries in Jim’s hometown newspaper and faithfully pays premiums on the policy. When he reads four years later that his uncle has died, he files a claim with the insurance company. The insurer’s investigation reveals that Mike and his uncle never met or corresponded, nor did Jim ever intend to leave any death benefit to Mike. In that instance, the insurance company would likely deny Mike’s claim on the grounds that he had no insurable interest in Jim’s life. That simply means he was never financially tied to Jim, Jim didn’t intend him as a beneficiary, and there is no reason for Mike to get the money.
As lawyers who specialize in the wrongful denial of life insurance claims, we know that insurance companies are often playing fast and loose when they deny claims. In those situations, we are here to help beneficiaries get the recovery they deserve. We do understand, however, that in cases of blatant fraud (such as those outlined in this article), the chances of recovery are slim to none.
If you need advice about a denied life insurance claim, please 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.