Using a Life Insurance Lawsuit to Fight a Denied Claim
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UPDATED: Aug 13, 2020
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If your life insurance claim has been denied, you may be able to initiate a lawsuit to recover any benefits that you are owed. A life insurance lawsuit can be a lengthy process that seems overwhelming, so hire an attorney to do the necessary work to get you the benefit your loved one intended to leave for you when they purchased the policy.
TIP: Having a legal expert on your side from the beginning will ensure that you preserve your rights, strengthen your case, and level the playing field against the insurance company’s attorneys. If you think you have cause to file a life insurance lawsuit, hire an experienced attorney!
When to Consider a Life Insurance Lawsuit
After your life insurance claim is denied, read the reason provided with a critical eye and look for any areas that you disagree. The life insurance company’s claim decision is not necessarily made correctly. While there are circumstances in which the denial of a life insurance claim is appropriate, you should look for opportunities to collect life insurance benefits despite the denial. Life insurance companies make money by collecting premiums and not paying out claims, so bad faith claim denials are not uncommon. In certain cases, the life insurance company may leave itself exposed to legal action:
- Death occurred in the contestability period: During the life insurance contestability period, the company has the right to deny a claim or cancel the coverage if any part of the policy can be interpreted to allow them to do so, and you can be sure that they will work hard to find a reason to avoid paying out the benefit. The contestability period exists to prevent fraud by the consumer, but it opens the door for the insurance company to find any little reason to deny a claim by broadly interpreting the coverage exceptions listed in the policy. If you are filing a claim during the contestability period, be sure to closely scrutinize any reasons for its denial, and get a consultation with an attorney.
- Misrepresentation or errors and omissions by the insurance agent. When selling a life insurance policy, an agent may lead a consumer to cut corners on an application by including or omitting certain information. This could lead to the company denying your life insurance claim later. Whatever an agent says to you, or you say to an agent while making an application for life insurance is legally deemed to be disclosed information, so make sure that you have a witness to attest to the conversations between you and the agent during the application process. If it is a situation where the agent did something wrong which ends up in a denied life insurance claim, you could recoup your death benefit by filing a claim under the agent’s error and omissions insurance, or pursuing legal action. Again, the best course of action is to consult with a life insurance attorney early in this process so he can direct you in how to proceed.
- Death during the application period. Some life insurance policies will provide temporary coverage during the time between you filling out an application and your policy being finalized. If a death occurs during the period between the application and the policy, the insurance company will lose a lot of money if they pay out a claim. Keep in mind, that the insurance company at this point only has the first month premium and to pay the claim would be a significant loss for them. As such, the company will take a hard look at any life insurance claim immediately after a policy has been submitted, and make a strong effort to deny the claim.
A life insurance attorney will be able to identify any problems with the company’s decision to deny a claim, so get one involved early! An attorney can help you make the decision to initiate a life insurance lawsuit if the insurance company has wrongfully denied your claim.
Why Consider a Life Insurance Lawsuit
Suing an insurance company gives the company a reason to reopen your claim, and encourages negotiations designed to reach a settlement. Once your life insurance claim is denied, the company has no reason to put any additional work into your case unless there is the threat of legal action. A life insurance lawsuit can be an effective way to open negotiations and get a settlement.
In the event negotiations fail, your attorney can litigate the life insurance claim in court. If you have a legal claim to your denied life insurance benefits, a judge or jury can award you the money that you are owed.
Whether the life insurance lawsuit leads to negotiations or to litigation, filing one gives you a better chance of recovering benefits that are wrongfully denied.
TIP: If you hope to use the life insurance lawsuit to open settlement negotiations, you still need an attorney. An attorney will make sure you have a legitimate claim to
How to Work with the Insurance Company
Although you should not plan on a life insurance lawsuit, or even hope for one, there things you need to keep in mind throughout the claim process that can help you should you need to pursue legal action:
- If the insurance company states that they are investigating the life insurance claim and ask for a recorded statement from you or anyone in your family, advise them you would like to seek the advice of a life insurance attorney first, before giving any type of statement. At that point, have your lawyer call the insurance claim representative.
- Keep a copy of all papers pertaining to your denied life insurance claim. From the initial denial letter to any subsequent correspondence made during the life insurance settlement process. Documentation is critical! Keep every copy, and forward all correspondence to your life insurance attorney
- Even if the life insurance claim was not denied but you feel there was unreasonable delay in paying the claim, contact a life insurance attorney. He or she would be able to investigate the cause for delay and help move the claim in a positive direction.
- Keep in mind that most life insurance attorneys offer free consultations, and do not be afraid to use one if you think you have a legal issue.
If you need a life insurance attorney to help you with a wrongfully denied life insurance claim, click here and a life insurance attorney will review your case and contact you. Most consultations are free, and you can find an attorney who will work on a contingency fee so you do not have to pay unless you get money from your insurance claim. With nothing to lose, do not be afraid to consult an attorney if you have any questions.
Read more articles about life insurance claims, lawsuits, and attorneys by clicking here.