Can a large amount of a Life Insurance policy be witheld from the beneficiaryvia over the phone notification

UPDATED: Oct 1, 2022

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Can a large amount of a Life Insurance policy be witheld from the beneficiaryvia over the phone notification

My son’s father passed away on September 18,2013 from cancer at the age if 44. He drove a truck for Tri-State Trucking when he became sick. I believe he obtained a life insurance policy through that company for 30,000.00 naming his only son sole beneficiary.Nine days after his death, my son recieved a cell phone call telling him that’they’ USAble Life would be KEEPING 20,000.00 and they would mail him the remaining amount, which totaled around 9,500 and some change. My son was 18 yrs old when his father died and was very upset and probably did not understand what ‘they’were telling him. I know almost 5 years have passed since this incident, but my son barely told me last year and he didnt want to deal with it. I was able to find and obtain a photocopy of the 9,500 check sent from USAble Life dated September 27, 2013 only 9 days after his father died with 2 men’s signatures on the check and the address of USAble Life in Westbrook, Maine it has on it.Please consider this incident for review and help us find out Why this occured and WHERE the remaining 20,000.00 went. ALSO, the place my son’s father worked,Tri-State Trucking has yet to release to his son the beneficiary a company Stock Share Plan from Jan 1, 2017 to August 1, 2017 in the vested value of 249.91. I was able to get that paper also.Please help us find out WHY all of this took place. I am trying my best to investigate,but I dont have the information from these companies because they are very hard to get ahold of. TRI-STATE Human Resources contact is Cheryl Adams this is about the stock of 249.91 and its hard to make out the two names on USAble Life check,a Matthew G?? and a John W.P?? but I do have a photocopy of that check from my son’s bank, Wells Fargo, which is currently active.Thank You.

Asked on August 16, 2018 under Insurance Law, New Mexico


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

Life insurance--any kind of insurance--is a contract. That means that the insurer must pay the agreed-upon amount when the conditions triggering payment occur. We can't definitely say whether in this case, withholding the money was valid--it depends on the terms of this policy, the circumstances, the status of the account, etc. What we can say is that as a general matter, an insurer has to pay the life insurance policy's face value unless there is something in the policy allowing or requiring a lesser payment in that situation, and that simply telling the beneficiary over the phone that they would pay less does not by itself make it legal. Based on what you write, there is reason to think that your son may have a claim for the rest of the life insurance money. 
The "statute of limitations" in NM, or time within which you must file a lawsuit if you are going to, is 6 years for a contract (including insurance) claim. Based on what you write, you son still has time--not alot of time, but some--to bring a lawsuit. He should file suit against the insurer; in the lawsuit, he can use what is called "discovery" (written questions or interrogatories; document production requests; etc.) to get information and documentation about why money was withheld from him. While a lawyer would clearly be beneficial, your son is allowed to bring  the lawsuit himself (so long as he is 18 or over)--if he can't find, can't afford, or doesn't want an attorney, he should file the lawsuit himself now, while he still can.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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