If an insured passes away prior to a life insurance policy’s effective date but after the first premium payment, the insurance company will likely deny the beneficiary’s life insurance claim. This makes sense to many of us, and to many state legislators, as the application for life insurance must generally be approved before an insurance company accepts the insurance risk.
In some states, though, temporary or interim coverage is recognized when insurance companies collect premiums on the application date but fail to clearly explain the delay in life insurance coverage. In Pennsylvania, Heather D. Lee, Esquire recently won an administrative appeal after a major life insurance company denied a claim based on the alleged “inactive” status of a policy. The insured, who suffered an unexpected heart attack less than one week before the policy’s “effective date,” was never properly notified of any delay in coverage even though the life insurance company eagerly accepted the first premium payment. With the assistance of an experienced life insurance lawyer, the insured’s policy was reinstated and the claim properly reviewed and paid.
Under these circumstances, an insurance company is still entitled to conduct a standard review of the application upon reinstatement because the insured’s death will have occurred within two (2) years of the policy’s effective date. For more information on how a life insurance attorney can help you with a similar or other life insurance denial, visit www.life-insurancelawyer.com and www.life-insurance-law-firm.com, or Contact Us at (800)403-5710 for a free claim evaluation.