If a person passes when the life insurance policy is still in underwriting does the insurance company still have to pay out?

UPDATED: Sep 30, 2022

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If a person passes when the life insurance policy is still in underwriting does the insurance company still have to pay out?

My stepdaughters lost there mother to cancer. Their
stepfather took out a 100k policy on himself naming them as
a beneficiary but he dropped dead of a heart attack while
the policy was supposedly still in underwriting. They are
claiming they don’t have to pay out because of this reason
and the heart attack was a preexisting condition. These girls
are still children. They have nothing left now.

Asked on October 11, 2016 under Insurance Law, New York


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

An policy in underwriting has not been issued. Payment is not required on a policy if the insured passes away before the policy is issued and in effect. While this timing is truly unfortunate, it appears that the insurer is correct: since no policy was in effect when he passed away, they do not need to pay.

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