Life Insurance Lawyer South Dakota

Whether you reside in: Aberdeen; Rapid City or Sioux Falls; our life insurance attorneys who live and work here in South Dakota are here to help resolve your delayed or denied life insurance claim.

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

Do life insurance claim delays always turn into denials?

It is a rare occasion when a person is excited to be making a claim against a life insurance policy. It certainly means that someone, the policyholder, has passed away. Typically, that means that the beneficiary has lost someone they cared about deeply. It may also mean that the beneficiary is facing financial insecurity without the policy payout.

Oftentimes, that financial insecurity is dire and immediate. Consequently, the faster the life insurance company pays out the death benefit, the sooner the policy beneficiary can breathe easy and start focusing on overcoming their grief.

Unfortunately, however, life insurance companies are not highly motivated to pay out claims quickly, or to pay them out at all. Indeed, if they can avoid paying claims all together, it means that every dollar the policyholder paid to the insurer in premiums was pure profit. And to the extent life insurers can significantly delay payment of claims, then they can continue to make that unpaid claim money earn them additional dollars through investments.

In light of this financial incentive to delay and deny claims, life insurance companies have manufactured a host of tricks and loopholes that allow them to avoid the obligations they owe to policyholders and beneficiaries alike.

This article explores some of the more common delay tactics used by life insurance companies. It also discusses when beneficiaries facing such delays should consider contacting an attorney who specializes in life insurance claim denials.

The endless internal investigation

When a life insurance policy beneficiary submits a claim to the insurance company, he typically expects to be paid within a month or two. In fact, most policies and/or relevant state laws require that valid claims be paid within a relatively short period of time. The insurance companies know this, of course, but it doesn’t stop them from engaging in hardball delay tactics.

For example, in response to claim submissions, some insurance companies almost immediately send out a response letter saying that the claim is “under investigation,” “under review,” or “subject to internal inquiry.” While the insurance company is supposed to provide more detail about exactly what is being investigated, they don’t always do that.

Instead, they begin what seems like an endless game of cat and mouse with the beneficiary. Each time the beneficiary contacts the insurance company for information about the status of their claim, they are told that the claim is still under review. Rarely, if ever, can the beneficiary even reach a real person on the phone to deal with their questions.

In some cases, the life insurer is simply testing the resolve of the beneficiary. If they can continue to stall payment for month after month after month, they may be able to get the beneficiary to tire of the process and simply stop asking. Once that happens, the insurance company knows the beneficiary is unlikely to be surprised (or aggressively indignant) when a denial letter ultimately ends up in their mailbox.

This is precisely why it is so important for any beneficiary facing one of these internal investigations to contact an attorney specializing in the denial of life insurance claims as soon as they start getting letters or other communications about the process. As professionals who successfully take on life insurance companies every single day, we know when their investigation processes are legitimate, and when they are simply bogus justifications for creating delays in payment.

The good news is, we’ll take over the fight for you. No longer will you have to make phone call after phone call to endless voice message systems. We’ll contact the insurance company on your behalf and, should they choose to ignore us, we’ll simply remind them of your right to sue the company in a court of law. That typically results in a responsive communications, more information about the status of the claim, and ultimately, quick payouts on valid claims.

The Examination Under Oath (EUO)

Another tactic that life insurance companies like to deploy is the request for an “Examination Under Oath” (EUO). Like the name implies, an EUO is a process whereby the insurance company asks the policy beneficiary or others with information about the policyholder to attend a formal, sworn examination. The entire process can be very intimidating because it can make the beneficiary believe they may have done something wrong.

Insurance companies know this and they also know that that level of intimidation will ultimately scare off a good percentage of beneficiaries from pursuing their claim. Indeed, if the insurance company can keep a beneficiary dragging their feet about setting up the formal EUO, they will eventually just send a claim denial letter in the mail. Relieved from the obligation to provide sworn testimony in a formal proceeding, many beneficiaries will never contest that denial letter.

That is a shame because in most cases, the beneficiary has done absolutely nothing wrong and has nothing to fear from the EUO process. Indeed, many times, the beneficiary knows absolutely nothing about the policyholder’s relationship with the insurance company and would be unable to provide useful information in any event.

Consequently, it is very important for a life insurance policy beneficiary to contact an attorney specializing in life insurance claim denials when they first receive a request for a EUO. Not only will we prepare you for the process, but we will attend the inquiry with you and will protect you from improper questioning by the insurance company’s attorneys. And, perhaps most importantly, we will fight the insurance company tooth and nail if they are simply using the process to avoid paying out a valid claim.

If you or someone you love is facing the denial of a life insurance claim or needless delays by the insurance company in paying your claim, please don’t hesitate to contact our firm. We’ll provide a free consultation and give you our professional assessment about your chances at contesting the claim denial. We’re here to help you. Feel free to contact us today.

South Dakota 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 South Dakota can help, whether you are in: Sioux Falls; Rapid City; Aberdeen; or anywhere in the state of South Dakota, we will get you the benefits to which you are entitled.
South Dakota Life Insurance Law
Policies through work are governed under ERISA. The primary regulating force here in South Dakota is Title 58 of the South Dakota Codified Laws, and oversight is provided by the South Dakota Division of Insurance.
Most Common Reasons for a Denied Life Insurance Claim in South Dakota
  • 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.
Life insurance as a gift to the deceased’s mistress?
What if premiums were paid out of community property?
There are few things more stressful in life than divorce and death. When the two get intertwined, however, things can get downright ugly. This is especially true when – after an ex-husband dies – the ex-wife learns for the first time that she is not the beneficiary under his life insurance policy. Things get even worse when it is revealed the actual beneficiary is the ex-husband’s mistress.
Such was the case for one Mississippi woman named Jackie. Jackie was married to her husband John from 1990 to 2010. That whole time, John worked for the same employer. Jackie was a stay at home mom and did not generate separate income.
As part of John’s employee benefit package, he received a $1,000,000 life insurance policy. For many years, Jackie was the designated beneficiary under that policy. In 2009, however, John designated a new beneficiary, Sue. Sue was John’s mistress. Jackie was completely unaware of Sue. She also didn’t know John had made a change to the policy.
In January 2010, John and Jackie were divorced. The divorce settlement did not mention John’s life insurance policy. Jackie would later testify that since John’s employer paid all of the premiums for the past twenty years, she didn’t even think about the policy during the divorce process.
John dies unexpectedly and Jackie makes a claim under his life insurance policy
In March 2010, John died of a sudden and unexpected heart attack. Given that they had only recently divorced, Jackie still had many of John’s things in her home at the time he died. As she sorted through his personal effects in the weeks following his death, she found the original copy of John’s life insurance policy.
Since Jackie believed she was the named beneficiary, she made an immediate claim for the $1,000,000 death benefit. Along with her claim, Jackie submitted an official death certificate showing that John’s death was natural and unexpected.
Three weeks later, Jackie received the following letter in the mail:
Dear Jackie,
We regret to inform you that your claim for death benefits under the policy of life insurance held by John must be denied.
REASON FOR DENIAL: You are not the named beneficiary under the subject policy.
Jackie was flabbergasted. The denial letter did not state who the named beneficiary was. Not knowing what else to do, she followed the instructions in the letter on how to make an administrative appeal of the life insurer’s decision.
Sue also makes a claim under John’s life insurance policy
Unbeknownst to Jackie, Sue also made a claim for death benefits under John’s life insurance policy. She made her first claim the same week that Jackie submitted her administrative appeal. Jackie did not anticipate any problem with her claim. John had specifically informed her that he had designated her as the beneficiary in 2009. Unfortunately, she was wrong. Sue also received unhappy news from the life insurer. Her letter said, in pertinent part:
Dear Sue,
We regret to inform you that your claim for death benefits under the policy of life insurance held by John is being delayed and may ultimately be denied.
REASON FOR DELAY: Another potentially valid beneficiary has made a claim for benefits under the subject policy. Further investigation is underway.
Sue didn’t rest on her laurels. She knew John intended for her to get the $1,000,000 payout on the policy. Accordingly, Sue contacted a lawyer specializing in the denial of life insurance claims. Her attorneys immediately undertook an investigation.
The attorneys learned that Jackie was making the following argument to the insurer: (1) that the premiums on John’s policy had been paid by his employer for 20 years; (2) that, as such, the premiums constituted part of John’s wages; (3) John’s wages during their marriage constituted “community property”; (4) Jackie was a joint owner of all community property; and (5) since she, in essence, paid half the premiums, she could be the only beneficiary under the policy.
Life insurance proceeds can be considered a gift
Sue’s attorneys immediately recognized that Jackie’s premise, while clever, was legally incorrect. In fact, earlier cases decided within the state held unambiguously that life insurance proceeds are considered a gift. Thus, regardless of who paid the premiums, the policyholder has the sole right to designate beneficiaries.
Jackie’s status as a wife, ex-wife, or community property owner had no impact on this analysis. John’s intention had been for the $1,000,000 to go to Sue upon his death and he had the right to make that decision.
Notwithstanding the clear law in this area, the insurance company thereafter continued to delay payment on Sue’s claim. Every three months or so, she would receive another letter telling her that her claim was still under review.
Eventually, Sue brought a lawsuit against the insurance company for breach of contract and bad faith. Her lawyers argued that the insurance company had been made aware of the unambiguous law stating that life insurance proceeds are a gift. Nonetheless, they delayed payment, hoping that Sue would give up and go away. After all, the insurance company had a lot to gain by refusing to pay out a $1,000,000 death benefit.
The court ultimately agreed. It awarded Sue the $1,000,000 death benefit, plus interest that accrued during the insurer’s delay. The court also awarded an additional $500,000 due to the insurance company’s bad faith.
The moral of this story is twofold: (1) don’t give up any time a life insurance company denies a claim; (2) hire an attorney specializing in life insurance claim denials to help you navigate the waters.
As attorneys practicing solely within this area of the law, we see cases like Sue’s all the time. We know that insurance companies will use every trick in the book to deny claims. Fortunately, we know the law and we won’t let them get away with it. If you’ve had a life insurance claim denied on any basis, call us today. We’re here to help.