Can a death claim be denied if the insured had a pre-existing condition and the insurance company did not require a medical exam?

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Can a death claim be denied if the insured had a pre-existing condition and the insurance company did not require a medical exam?

The company requested medical records after my sister died. They stated they need medical records because she died before the 2 years but they did not require a medical exam before issuing the policy. Can they deny me payment? The money goes to the funeral home. She died over 6 months ago and I’m still waiting on payment.

Asked on March 2, 2012 under Insurance Law, South Carolina

Answers:

Robert Johnston / Law Office of Robert J. Johnston Attorney

Answered 9 years ago | Contributor

The first answer you got was not very good. The only thing that was addressed in that answer was misrepresentation. There is far more to it than that.

Whether or not the insurance company can deny depends on how the policy is written. The language of the policy completely controls the terms and whether the insurance company is obligated to pay. Read the policy and it would be a good idea to have an attorney read it as well. Also, you said she died six months ago. But you didn't say when the claim was submitted. If it was submitted immediately, then six months is way too long. You are entitled to an immediate response from the insurance company.

Robert Slim / Robert C. Slim - Attorney at Law

Answered 9 years ago | Contributor

They can deny payment if there was fraud in the application process.  If the insured misrepresented a material fact in the application, then benefits can be deined.  However, the misrepresentation has to be "material."  That is, the misrepresentation has to be so that the insurance company would have denied coverage even if the facts had been revealed in the application.  If there is a material misprepresentation and the insurance company denies the claim, they would have to refund all the premiums that were paid.  

On the other hand, if there was a material misrepresentation but the insurance company would have issued the policy anyway (but at a higher rate), then the benefits are payable with a credit for the difference in the premium rate.


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