We have answers to some of our clients’ most often asked questions in our life insurance FAQ:
Q. My claim was denied. What is the first thing I need to do?
A. First, read over your policy in order to get an understanding of what is covered. This is an essential step in knowing how to fight back against the insurer. We will help you decipher the terminology in our consultation with you, and make sure you are fully informed. Insurance companies count on policyholders and beneficiaries to not understand their policy or know their rights.
Q. What is a material misrepresentation?
A. A material misrepresentation happens when an applicant withholds information, or lies on an application, or is otherwise not entirely truthful, in such a way that, if the insurance company had known the true facts, it would not have issued coverage. Most denials are based on alleged material misrepresentations. Such denials are often debatable and can be overturned with effective legal representation.
For nearly all life insurance policies, there is a two-year time limit in which the insurance company can dispute the validity of the insurance policy on the grounds of material misrepresentation. This is known as the period of contestability explained below.
Q. What is an incontestability clause in a life insurance policy?
A. Also called the period of contestability, in most states this is a two-year window of time that begins as soon as the policy goes into effect. Within those two years, if the policyholder dies, the insurance company that issued the policy can legally investigate the circumstances of the death as well as all medical history and information on the original policy application. The life insurance company is looking for material misrepresentations by the policyholder as grounds upon which the insurer can deny death benefits.
Q. What does it mean if a life insurance company rescinds my policy?
A. To rescind a policy means to cancel a policy. It is the reversal, or undoing, of the contract. Cancellations may occur for many reasons. Some rescissions are valid such as for flagrant non-payment of premiums, or based on the insured’s fraudulent application. Other rescissions are wrongfully made by insurance companies who act in bad faith or use underhanded tactics to avoid paying out death benefits. It is always wise to seek the counsel of a life insurance attorney if you or a loved one’s policy has been rescinded. The period of contestability applies to policy cancellations, just as it applies to claim denials.
Q. The insurance company sent me a denial letter. Do I need an attorney?
A. Yes, it is essential that you seek the advice of a life insurance lawyer to review your claim and to explain your rights and options. Every situation is different, and no two policies are alike. Without a proper legal review, you may miss the opportunity to appeal a wrongful denial or sue the insurance company for your legitimately deserved benefits. We have seen too many cases in which valid claims for death benefits were denied by life insurance companies whose motives are to protect their bottom line and avoid payouts.
Q. What does it cost to hire an attorney?
A. Our firm represents all persons involved in a life insurance claim denial on a contingency basis. This means we charge no fees unless we collect financial compensation for you. Contingent fee arrangements are common in life insurance cases, offering all persons equal access to a qualified lawyer and the justice system. We offer every prospective client a free, no-obligation case review with a life insurance lawyer, during which attorney fees and costs are explained concerning your case.
Q. What is underwriting?
A. Underwriting is the process the insurance company uses to determine the risk class that is appropriate for a potential insured. If you apply for life insurance, the company will consider various factors such as your age, gender, health and medical records, public records, financial background and risk factors of hobbies and vocation. These factors are applied to assess your predictable life expectancy in a “class” of people with similar lifestyles and becomes the basis for setting your premiums (or declining an application).
For specific answers to more frequently asked questions regarding claim denials, contact the experienced life insurance attorneys at Marc Whitehead & Associates by calling 800-562-9830.