At Mannion Lowe & Oksenendler, P.C., our attorneys deal with insurance claims’ denials across all lines of insurance, but the denial of a life insurance benefit is often the most tragic. The death of a spouse or loved one can throw a family into turmoil, and when the deceased was the primary breadwinner, the family’s living situation can quickly become dire if financial help is not quickly forthcoming. Consumers do the right thing and take out life insurance to make sure their family is taken care of, keeping up with premiums month after month, year after year. When the time comes and the insurance company refuses to pay, it is nothing short of a tragic injustice.
If you would like to discuss your concerns regarding a life insurance problem with one of our attorneys, we invite you to send us an email today.
Material Misrepresentation — The Insurance Company’s Secret Weapon
Over 5,000 life insurance claims worth $372 million were denied last year, according to a review conducted by the Los Angeles Times (see story at AARP website), in an analysis of data compiled by the National Association of Insurance Commissioners. The majority of denials were based on an alleged material misrepresentation. As a matter of course, when a claim for benefits is presented, the insurance company conducts an extensive review of the individual’s medical history as compared to the original application for insurance, looking for any material misrepresentation. A material misrepresentation occurs when information is withheld or presented in a way that, had the carrier known the true facts, it would not have issued the policy.
Insurers are experts at finding such alleged misrepresentations. In many cases, the alleged misrepresentation has nothing to do with the cause of death whatsoever. Insurers are merely looking for any excuse not to pay the claim. Quite often the facts were never intentionally hidden from the insurance company; the applicant either didn’t know the information was pertinent or assumed the insurance company would find it by looking at the applicant’s medical records. But many carriers do not conduct a thorough investigation on the front end. They would rather accept the premiums and only investigate when a claim is made.
Most states limit this “look back” or “contestability period” to two years after the policy was issued. Even without a material misrepresentation, the insurer may still deny benefits if it can find any lapse in premiums or if it can make an arguable case for foul play or suicide. In other cases, the policy that is issued contains so many exclusions as to the cause of death that it really provides no benefit at all.
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A denial that is not based on an actual material misrepresentation may be bad faith, and the insurer can be held liable for the damages caused. The lawyers at Mannion Lowe & Oksenendler, P.C. know when the applicant was being honest but the insurance company is being less than forthright in its tactics. If an insurance company is denying you benefits or is not playing fair, contact the attorneys at Mannion Lowe & Oksenendler, P.C. for a free consultation. Call 800-724-6188, or contact us by email now.