Life Insurance Bad Faith Practices: Updating Policies Can Expose You To Another Contestable Period

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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 policies are subject to a two year contestable period in which insurers can deny claims for unreported pre-existing conditions, questions about whether a death was accidental, questions about possible fraudulent activity and others. While bad faith life insurance lawyers say that there is nothing wrong with that practice, there are instances in which insurers will “update” or “add to” existing policies – exposing insurers to another two year contestable period.

Attorney Bob Scott Discusses Life Insurance Company Bad Faith Tactics

Bob Scott, a California attorney and partner with the Advocate Law Group, says that life insurance company practices of taking policyholders out of a policy that’s incontestable because they’ve had it more than two years is likely more common than most people think. He explained:

Many times, you could have a life insurance policy for many years and your insurer will say, ‘You should buy this one instead.’ However, they don’t tell you that they’re getting first-year commissions which can be as much as 100 percent of the first-year premium. They also don’t tell you that it’s exposing you to another contestable period.

That’s outrageous. If they wanted to sell a supplement with more coverage without disturbing that existing policy, the agent should try to get the company to waive the two-year contestable, at least just to the amount that they’re substituting into that new policy.

Questioning Life Insurance Company Tactics

If your life insurance company has acted in bad faith by wrongly exposing you to another contestable period or denied your life insurance claim due to a pre-existing condition, it’s important to question their tactics. You can do that by contacting an experienced bad faith insurance attorney who understands how life insurance companies operate – thereby putting you on equal ground.

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