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Bad Faith in Life Insurance Claims

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A big reason for purchasing life insurance is to ensure that the deceased doesn’t cause financial harm to surrounding relatives and friends. Naming beneficiaries on the insurance policy gives the insured peace of mind to know that purchasing a life insurance policy will secure financial income in case death of the insured occurs.

On occasion, when the insured dies, beneficiaries come up against claim denials presented by insurance companies. This leaves beneficiaries in a place of uncertainty. It is far too late to attempt to purchase a new policy for the deceased. Not only are family and friends left to hold each other together after losing their loved one, but they now also have to deal with struggling financially due to their claim being denied.

Evidence may show that the claim was inaccurately denied. The reason for the denial has to be validated and so does the evidence provided by the beneficiary to support the validity of the claim. If there has been a breach on behalf of the insurance company, the value of the damages that are to be recovered by the beneficiary could well exceed the value of the initial policy. These costs are not limited to punitive damages and attorney fees. Seek an attorney well versed in bad faith cases to ensure that you prevail on your bad faith claim.

Possibilities for Claim Denial

The possible angles for denial from an insurance company are not great in number. Here are some of the most common reasons for claim denials.

  • The insured may have falsified important information while filling out documents asking about health history. There is a possibility that there was a history of cancer in the insured’s family, however that information could have been deliberately left out and hidden from the insurance company.
  • Suicide cases are not covered by the policy. Therefore, the insured would not be covered.
  • Some dangerous activities are excluded from the policy. If the insured died by way of any of these dangerous activities, he or she would not be covered by the policy.
  • If the insured failed to pay the premiums, this may be grounds for a claim denial.

These reasons that may be given by an insurance company do not validate or support a claim denial.
It is common for life insurance company policies to state that the policies given are incontestable after two years. This means that if the policy has been enforced for a minimum of two years without a notice being brought to the misrepresentations on the insured’s application, the insurance company must adhere to the policy.

False information given on the application does not automatically justify a claim denial, even during a time when the policy can be contested. In most states, if the applicant lied about a history of cancer in the family and died in a car accident, it is not allowed for an insurance company to deny this claim.

Common Occurrences for Bad Faith Claims

Post claim underwriting is an unfitting method used commonly by insurance companies. The insurance company deliberately chooses to wait until the insured is deceased. After the insured dies, the insurance company proceeds to investigate the insured’s information given on the initial application. This investigation should have taken place before the policy was ever approved. The insurer will use any information discovered while investigating to use as a reason to deny the insured rightful benefits. The signs of post claim underwriting can be uncovered by an attorney well versed in bad faith claims. Upon uncovering the signs of post claim underwriting, the lawyer can now begin to build a strong bad faith claim against the insurer.

Some insurance companies will take it a step further by stating that the misrepresented health information, given by the applicant, led them to approve a policy they would have never agreed upon had they known the truth about the applicant’s health. An experienced bad faith lawyer can thoroughly determine the legitimacy for the basis of denying the beneficiary benefits.

  • Has the insurance company approved other applicants for life insurance that have the same health problem?
  • If there are others with the same health issue, how similar are the policy terms to the terms of the denied beneficiary’s policy?
  • Who made the misrepresentation? Was is the applicant or was it the insurance agent’s doing in order to get the application approved?

Some insurance companies are just lazy and sloppy. They do not thoroughly investigate the claim before prematurely denying it.

If you have experienced the denial of your insurance claim for any of the reasons listed above, you have valid reasons to doubt the accuracy of your claim denial. The attorney’s of Surrano Law are waiting for your call. As we listen to your story and claim, we will gladly inform you of the options available to you. Cost provisions are available for every need, and occasionally we accept cases on contingency. Receive your first consultation at no cost.

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