Life Insurance Claims 101

A life insurance policy is a contract between the policyholder and the life insurance company. If the policyholder dies while the policy is in force, the life insurance company will pay the policyholders beneficiaries the contracted amount of money. However, issues may arise in an insurance claim if the policyholder dies during the contestability period. That’s when you need help.

Although people are solicited to buy life insurance from companies and their agents you must fill out an application before being accepted. As part of the process you may also have to undergo a medical exam, and give blood or urine. The life insurance application will also have a number of questions concerning your age, martial status, occupation, current health history, criminal history, and other information. The insurance company then reviews the application and determines if they will insure the applicant, and how much money the policy will be for and the premium. The process of deciding which applicants to take, on what terms is called underwriting. During this process the company relies on the answers you have given in making its decisions.

If an applicant is approved for life insurance, but if the insured dies within the period of contestability the insurance company can deny the beneficiaries claim. The contestability period differs by state and is set by law. When reviewing the claim during this period the insurance company will investigate and deny the life insurance if they find any “material misrepresentations.”

A material misrepresentation is any discrepancy, falsehood, omission, or distortions that would have caused the underwriters to reject the application for insurance.

Common material misrepresentations include: chronic disease, medical history, occupation/employment, age, income, tobacco usage, alcohol/drug usage, finances, other life Insurance policies, and dangerous recreational activities. life insurance interpleader lawyers

When a person dies while they are still within the contestability period, insurance companies will launch an investigation to determine if the decedent made any material misrepresentations during the application process. If the insurance company believes that there is a material misrepresentation, they can deny the insurance claim made by the surviving loved ones. If the beneficiaries want to contest the decision they must file a lawsuit to contest the insurance company’s decision.

Such lawsuits may have a good chance of success as many times, the alleged “material misrepresentation” is not actually material, unclear, or debatable. An attorney experienced in insurance law may be able to pressure the insurance company to change its mind and pay the claim. Alternatively the insurance lawyer can sue the company for breach of the insurance agreement. In many states the failure of a company to pay a insurance claim that is unjustified will result in penalties such as interest and in some cases attorney’s fees.

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