With its roots in ancient Roman times, the concept of life insurance found its way to the U.S. in the 1760s. Not offered to the working class until the 1870s, sales increased dramatically after the first World War. These days, approximately three in five Americans have some type of life insurance and another 34% are likely to buy it in the coming year. Coverage needs vary, based on personal circumstances, and are typically met by either a term life policy or a whole life policy. Payment is not automatic. Beneficiaries have to file claims, which far too often are improperly denied.
Denial of a life insurance claim is disheartening, but not necessarily appropriate. To find out why payment was refused and what action can be taken, beneficiaries should seek legal assistance. An attorney can research the rejection of coverage and help collect any benefits that were wrongfully denied.
Insurance companies are businesses and, as such, they seek to protect their bottom line. They may search for reasons not to pay life insurance benefits. One common argument is that the insured made a material misrepresentation on the application. Material misstatements are those that influenced the decision to underwrite the policy, that would have caused the insurer to refuse issuance if they had not been stated. Companies are allowed to reject coverage because they were misled, so it’s important to be honest on the application. There are many ways to fight denials made on this basis. For example, it may be possible to show that the insured filled out the application based on what was known and believed or on the advice of an insurance agent who cut corners in order to hasten the sale.
A second frequently used justification for denial is that the policy had lapsed due to nonpayment. However, an investigation may reveal that the premiums were received but not properly applied. In some situations, the insurer is not permitted to cancel a policy for nonpayment unless it has first sent a specific reminder notice. Other familiar arguments include suspicions of fraud if the death occurs soon after the policy is purchased, that the death was not covered under the provisions of the policy, or that the beneficiary was not properly listed.
Insurance companies are legally bound to review all claims fairly and in good faith. They also must give a reason for denying a life insurance claim and must provide notice of the denial. Depending on the wording of the contract and the jurisdiction where the claim is filed, failure to do so can be sufficient grounds for a lawsuit seeking to recover the wrongfully withheld payment.
We Can Help
As one of South Florida's most respected and oldest law firms, Stabinski & Funt, P.A. has helped many people sort out their legal rights, responsibilities and remedies. We are highly experienced in handling insurance claims and, in many cases, we can do so without cost to you. Fees and expenses are frequently paid by the insurance company, so nothing comes out of your recovery. We also work on a contingency basis, which means that if there is no recovery, there is no fee or cost to you. If you wish to learn more about how our firm can be of assistance to you, we encourage you to contact us for a free consultation by calling 305-964-8644 or filling out a free case evaluation form.