Life Insurance Bad Faith: Policyholders Wrongly Rejected Over Pre-Existing Conditions

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jul 16, 2021

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Life insurance companies frequently deny life insurance benefits by claiming that policyholders failed to inform them of pre-existing conditions on their life insurance applications. However, according to Bob Scott, a California attorney and partner with the Advocate Law Group, policyholders should not accept an insurance company’s rejection of benefits for pre-existing conditions without contacting a bad faith insurance lawyer first.

Using Pre-Existing Conditions As An Excuse To Deny Life Insurance Claims

That’s exactly what some life insurance companies do, according to Scott, who told us:

When it comes to life insurance, there are always disputes in the contestable period of coverage – which is the first two years after the policy has been issued. In many cases, the insurance company will say, ‘Well, you didn’t tell us of these prior conditions.’ In fact, I have a case right now in which the application asked, ‘Have you ever been treated for cancer, a heart condition, high blood pressure (all the big ones) or any other medical defect?’ Then it says, ‘Don’t include things like the common cold.’

Well, the insured had slept wrong on their shoulder and they went in for about four treatments with a chiropractor just for that soreness and then they were fine. They never put it down on the policy as it wasn’t a major event and their claim was denied because of it. Outrageous.

Has Your Life Insurance Policy Been Rescinded?

If your life insurance policy has been rescinded during the two year contestable period over a pre-existing condition, make sure you look to a bad faith insurance attorney for a technical analysis of your situation as your insurer may have had its own interests at heart and acted in bad faith. You may be entitled to life insurance bad faith damages such as monies you spent as a result of the rescission, emotional damages or possibly punitive damages.

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