Law Offices of Heather D. Lee

Common Reasons For Delaying & Denying Life Insurance Claims

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At least 5,000 life insurance claims are denied in the United States every year, and even more policies go unclaimed.  People are usually surprised to discover that life insurance companies can delay or deny claims for many different reasons.  In fact, most people believe that when an insured passes away, the beneficiary receives a payout immediately.  Unfortunately, this is too often not the case.  Like most businesses, life insurance companies are motivated by profit, having a strong financial incentive to collect premiums but later deny as many life insurance claims as possible, or to delay claims as long as possible.

DELAYED LIFE INSURANCE CLAIMS

If a life insurance company has failed to promptly issue payment of your life insurance proceeds, you may have a claim for breach of contract and bad faith insurance practices.  Life insurance companies must investigate your claim within a reasonable period of time, usually within sixty (60) days of the claim being filed or in accordance with the life insurance policy terms.  An insurance company may attempt to discourage you from hiring a life insurance lawyer by wrongfully delaying your life insurance claim, offering a reduced settlement amount, or making other efforts to avoid paying the full claim.

Some common tactics that life insurance companies will use to wrongfully delay your claim include but are not limited to the following:

Insured’s Death Occurring Within Contestable Period
Hospital Records/Medical Documentation Not Yet Received
Hospital or Medical Provider Refuses to Release Records
Failure to Provide Income Tax Returns
Failure to Provide Non-existent Medical Documentation
Independent Investigation Based on Suspicious Cause of Death
Independent Medical Review to Dispute Evidence
Beneficiary Dispute Based On Divorce
Beneficiary Dispute Based On Suspicious Cause of Death

No matter how badly you need the insurance proceeds, you should never accept a settlement offer without the advice of an experienced life insurance attorney.  An offer to settle your claim for a reduced amount may indicate that the insurance company’s reason for delaying or denying your claim is illegitimate.

To discourage beneficiaries from pursuing a wrongfully denied life insurance claim, life insurance companies will mail complex denial letters designed to confuse you.  Life insurance companies know that you are likely unfamiliar with the life insurance contract itself, or with your rights as the beneficiary.
Some common tactics that insurance companies will use to wrongfully deny your claim include but are not limited to the following:
Policy Lapse Due to Nonpayment
Misrepresentations Regarding Age, Employment and/or Income
Failure to Disclose Immaterial Pre-Existing Medical Condition
Failure to Disclose Medical Appointments/Regular Check-Ups
Failure to Disclose Unknown/Unofficial Medical Diagnosis
Failure to Disclose Condition Requiring Future Treatment
Failure to Disclose Prior Alcohol, Drug, or Tobacco Use
Failure to Disclose Criminal History on Application for Insurance
Accidental Death Related to Independent Medical Condition
Accidental Death Actually Self-Inflicted
Accidental Death Caused by Alcohol/Drug Use or Crime
Accidental Death Not Occurring Within Specific Time/Date
Accidental Overdose Caused by Misuse of Medication
Policy Not Active Due to Death Occurring Prior to Effective Date
Policy Not Active Based on Period of Limited Activity Exclusion
Independent Investigation Based on Suspicious Cause of Death
Insufficient Evidence to Show Heart Attack
Independent Medical Examiner Disputes Evidence
Change In Health After Policy Lapse Due to Nonpayment
Change In Health Condition Prior to Effective Date of Insurance
Handwriting Expert Claims False Application Signature
Failure to Elect and/or Qualify for Employment Coverage
Failure to Convert Employment Coverage to Individual Policy
Insurance Company Not Responsible for Agency Errors
Insured Not Resident of United States on Date of Death
Failure to Properly Change Beneficiary
Policy Lapse Due to Depleted Cash Value
Many insurance companies have large legal departments prepared to defend denied life insurance claims, which can discourage a beneficiary from hiring a life insurance attorney, appealing a denied life insurance claim, or filing a law suit.
The Life & Property Insurance Law Offices of Heather D. Lee, Esquire are familiar with the various tactics used by life insurance companies to delay and deny claims, and we are experienced in pressuring insurance companies to quickly complete the claims process and pay all proceeds due under their life insurance policies.  If your insurance claim is being wrongfully delayed or denied, Contact Us for your free case evaluation today.

Heather D. Lee, Esquire Wins Reinstatement Of Policy When Life Insurance Company Failed To Give Notice Of Payment Lapse

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Insurance companies must generally notify an insured when a policy is at risk of lapsing due to nonpayment.  Such notification may be required by statute, as a term in the insurance contract, or by customary practice.  Policies commonly provide for a grace period of thirty-one (31) days, which allows an insured to avoid cancellation of insurance coverage if premiums are paid within the specified time-frame.  This is especially important with respect to life insurance policies because coverage is based on the applicant’s health at the time the policy becomes active.  In other words, if a life insurance contract lapses after the grace-period expires, reinstatement is subject to the same medical underwriting requirements as an application for a new policy.

Consider the following example: Larger-Than-Life Insurance Company (LTL) issues a life insurance policy to Youthful Yolanda, who faithfully pays her premiums for 15 years by monthly automatic withdrawals from her bank account.  Last month, though, Yolanda’s premium payment was returned due to insufficient funds in her account, triggering a 31-day grace period.  Despite LTL’s customary practice of notifying insureds when automatic premium withdrawals are returned, it fails to notify Yolanda that her policy will soon lapse. Unfortunately, Yolanda did not realize the payment was returned, resulting in the cancellation of her life insurance policy.  Since Yolanda is not so youthful anymore, and her health has changed over the past 15 years, she is no longer eligible for a new life insurance policy.  Even though LTL is entitled to keep all of her previous payments, Yolanda no longer has coverage and LTL refuses to reinstate her lapsed policy.

This is a fairly common story, with variations.  Sometimes insurance companies mail the appropriate notification too late, or to an incorrect mailing address because it has failed to process an address-change request.  Just this month, the Life & Property Insurance Law Offices of Heather D. Lee, Esquire successfully fought for reinstatement of a life insurance policy that lapsed when a major insurance company mailed notification of an overdue premium payment after the grace period had already expired.  Even a timely mailing may not contain the proper information to provide sufficient notice, such as the amount due or the date a policy will terminate.

If your life insurance policy has lapsed for nonpayment, or if you are a beneficiary whose claim has been denied because a policy lapsed prior to the insured’s death, you should speak to an experienced life insurance lawyer about your rights.  Heather D. Lee, Esquire offers free consultations on all life and property insurance cases.

Don Cornelius’ Ex-Wife May Collect $300,000 In Life Insurance Benefits Despite Suicide

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The recent suicide of Don Cornelius and subsequent reports that his ex-wife, Viktoria Chapman Cornelius, is entitled to collect approximately $300,000 in life insurance benefits has caused a great deal of confusion.  Many of us wrongly assume that an act of suicide automatically precludes recovery against any life insurance policy.  In fact, no such “blanket” exclusion exists in life insurance law, and whether a beneficiary will collect life insurance proceeds following a suicide ultimately depends upon the terms of each policy.

On February 1, 2012, TMZ made a misleading report that Viktoria Chapman Cornelius has “score[d] huge life insurance payout” based on California law.  According to the TMZ Article, the ex-couple’s divorce decree provides that Viktoria was to remain beneficiary of two life insurance policies, and “[u]nder California law, if a policyholder commits suicide within [two] years of the time the policy is issued, the company can deny payment.”  TMZ prematurely concluded that because Don Cornelius took out the policy more than two years ago, Viktoria would undoubtedly collect the life insurance proceeds.  However, her right to the subject benefits cannot be confirmed without a thorough legal review of the life insurance contracts, and any reports based solely on “California law” are unfounded.

Typically, life insurance policies do expressly deny coverage for death by suicide, and such policies contain an exclusionary clause and often a definition of suicide.  For example, life insurance contracts may include a provision similar to the following: “If the insured, whether sane or insane, dies by suicide within two years from the date of the policy, no benefits are payable.”  These exclusions are generally recognized as valid.

An issue surrounding death by suicide arises, with or without an exclusionary clause, under Accidental Death & Dismemberment policies.  The concept of denying AD&D coverage for suicide is easier to understand because an intentional taking of one’s life can hardly be considered an accident.  In most cases, though, the life insurance company has the burden to prove that an insured’s death was committed with the requisite suicidal intent, and a mere intent to inflict pain which results in death will not be sufficient.  Indeed, numerous life insurance cases have involved an insured’s death caused by “erotic asphyxiation,” or the act of intentionally choking oneself or otherwise restricting oxygen to the brain for sexual gratification.  Under these circumstances, a self-inflicted death will not be considered an intentional suicide for the purposes of life insurance coverage.  Thus, while Viktoria Chapman Cornelius may collect the full $300,000 in benefits, additional information about the specific terms of Don Cornelius’ life insurance contracts is required to make a proper determination.

Don Cornelius was a pioneer whose enormous contribution to music, television, and popular culture will always be remembered and appreciated.  He is best known for his creation of “Soul Train” and its national exposure and tribute to decades of black artists and icons.  Don – wishing you eternal love, peace, and soul…

Feds Immune from Federal Employees’ Group Life Insurance Act (FEGLIA) Lawsuit for Loss of Beneficiary Designations

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In Graber v. Metropolitan Life Insurance Company, a lawsuit against the United States and Metropolitan Life Insurance Company to obtain the life insurance benefits of a deceased federal employee, a U.S. District Court in Ohio ruled yesterday that the federal government has sovereign immunity for the improper maintenance of life insurance beneficiary designation forms.  The dispute arose when Metropolitan Life Insurance Company denied a life insurance claim filed by the insured’s surviving spouse and subsequently issued payment of the benefits to the insured’s brother.  Met Life based its decision on the insured’s incomplete personnel file, which contained a form designating the brother as sole beneficiary in 1996 but lacked any record of the insured’s request in 2008 to change the beneficiary to her husband.

Under the Federal Employees’ Group Life Insurance Act, the United States has waived sovereign immunity for any “breach of legal duty owed.”  Although the federal government was responsible for maintaining the insured’s personnel file, the District Court’s holding that no duty exists to properly maintain FEGLI records precludes recovery, as the federal government has not unequivocally consented to be sued for the loss, misfiling, or misplacing of beneficiary designation forms.

Sound like a bunch of nonsensical legal mumbo jumbo?  Well, that’s debatable… even federal courts are somewhat split on the issue.  Prior to the Graber decision, the Fifth Circuit concluded in Metropolitan Life v. Atkins that the federal government does have the duty to properly maintain beneficiary designation forms in the care of its FEGLI personnel clerks.  Yet, other federal courts limit the United States’ duty under the Act to only negotiating and issuing the correct FEGLI life insurance policy.

The lesson to be taken away from this discussion is two-fold.  First, if you are a federal employee with group life insurance benefits, follow-up on any beneficiary designations to ensure that your personnel file accurately reflects your intentions.  And most importantly, always consult with a life insurance lawyer about your denied life insurance claim or beneficiary dispute.  Until the Supreme Court picks a side, every “designated” beneficiary deserves to make their case.

The full court opinions referenced in this post can be found here —–> Graber v. Metropolitan Life ; Metropolitan Life v. Atkins .

For additional information on how a life insurance lawyer can help you, visit www.life-insurancelawyer.com or Contact Us at (800)403-5710 to speak with an attorney about your case now.

Interim Coverage Granted For Insured Who Died Prior To Policy’s Effective Date

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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 or Contact Us at (800)403-5710 for a free claim evaluation.

MEGA Life & Health Agrees to $2 Million Settlement For Abusive Insurance Practices

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Following multiple and habitual violations of Rhode Island’s Small Employer Health Insurance Availability Act since 2004, MEGA Life & Health Insurance Company has reached a settlement with the State’s Health Insurance Commissioner for more than $2 million.  Pursuant to the settlement agreement, MEGA Life & Health must pay $2.3 million in restitution to approximately 5,500 self-employed Rhode Islanders due to charging excessive membership fees and premiums, wrongfully denying coverage for pre-existing conditions, and failing to provide equal coverage among its eligible health insurance customers, among other violations.

WPRI Eyewitness News On MEGA Life & Health’s $2 Million Settlement

Rhode Island is not the only state that has accused MEGA Life & Health Insurance Company of violating state laws enacted to regulate the industry and to protect consumers against bad faith insurance practices.  In 2008, HealthMarkets, Inc. and its subsidiaries [MEGA Life & Health Insurance Company, Mid-West National Life Insurance Company of Tennessee, and Chesapeake Life Insurance Company] settled a multi-state bad faith suit in the amount of $20 million for wide-spread and abusive practices.  Many states and individual policyholders have also pursued independent actions against HealthMarkets and its affiliates.

If you have concerns about your insurance company’s compliance with state laws or the terms of a life, health, or other insurance policy, you should immediately contact an experienced life insurance attorney about your case.  The Life & Property Insurance Law Offices of Heather D. Lee, Esquire offer free consultations on all life and property insurance matters.

$50,000 Life Insurance Policy… for FREE?

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In 2002, Massachusetts Life Insurance Company implemented a $50,000 free life insurance program (yes, free!) for the educational benefit of children in low-income families.  The program is nation-wide and will be offered to a total of 20,000 families, equaling $1 billion in life insurance proceeds.  To qualify for a 10-year term life insurance policy through the MassMutual LifeBridge program, a parent or legal guardian of one or more dependent children must be in good health, as determined by Massachusetts Life, and have a household income of no more than $40,000.  In the event of the insured parent’s or legal guardian’s death, MassMutual will pay the $50,000 proceeds to an educational trust, which can then be used to cover pre-school, private school, trade school, community college, and/or university expenses such as tuition, housing, books, and other educational expenses.  All proceeds are paid directly to the educational institution as covered expenses accrue, ensuring that the $50,000 is only used for its intended purpose.

Now, I know what you are thinking.  Or at least I know what I was thinking when I discovered this almost-too-good-to-be-true free life insurance program: ‘If MassMutual instituted the LifeBridge program in 2002, why am I only now hearing about it in 2011!?’  It is possible that Massachusetts Life has failed to promote the LifeBridge free life insurance program in ways calculated to reach eligible applicants in low-income communities. Only about 12,000 LifeBridge policies have been issued in the nearly 10 years since MassMutual launched the program, just over one-half of the $1 billion commitment.  Maybe corporate responsibility only mandates that MassMutual implement the LifeBridge program and receive credit for its altruism without making the families and children meant to benefit from the program actually aware of its existence.  All skepticism aside, though, the LifeBridge free life insurance program has secured and undoubtedly will continue to secure educational opportunities for many children in low-income families.

Is there a catch?  Not necessarily.  But there are some conditions and exclusions.  In addition to the requirements that the parent or legal guardian be in good health and have a household income of between $10,000-$40,000, the applicant for free life insurance must be between the ages of 19-42.  This means a grandparent with legal guardianship may apply, but only a very young grandparent.  The age requirement also excludes an 18-year-old parent, even though an 18-year-old child does not qualify as an eligible beneficiary.  Also, the parent or legal guardian must be a permanent, legal resident of the United States and employed full or part-time at the time of application.

An insured’s cause of death will not affect the payment of proceeds, except that suicide-related deaths occurring within two years of the policy’s effective date are not covered.  Parents or legal guardians who have been diagnosed with cancer, heart disease, Type 1 Diabetes, and/or HIV are specifically excluded from coverage, as well as any applicant who has abused alcohol or drugs within 10 years of the application date or is on probation at the time of application.  Finally, the $50,000 free life insurance policy is available only to one parent or legal guardian per household, so an eligible parent or legal guardian with three, four, five, or more children will have to spread the proceeds fairly thin or decide which child is most in need of a quality education.

If Massachusetts Life determines that a parent or legal guardian is eligible to apply for the LifeBridge program, the company assigns a MassMutual representative to verify the applicant’s identification, employment status, income, residency, children’s ages, and also to administer a blood and urine test and a brief medical exam.  Once accepted into the LifeBridge program, the insured’s children will be entitled to the educational benefit upon death of the parent or legal guardian during the 10-year policy term, and until the later of 35 years-of-age or 10 years after the insured’s date of death.  Do you think you are eligible to apply?  Then apply today!  Additional information and an eligibility form can be found here:

MassMutual LifeBridge Program Documents

And tell your friends!  Because in the words of Massachusetts Life Insurance Company: “All children, including yours, are the future of our country.  And the more educated our future leaders are, the better prepared they will be to help meet the challenges of tomorrow.” The Life & Property Insurance Law Bloggers agree.

Protecting Your Rights & Your Family

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At the Life & Property Insurance Law Offices of Heather D. Lee, PLLC, we assist insureds and their beneficiaries on delayed and denied life insurance claims, homeowners and renters insurance disputes, and other contract and consumer protection matters.  Our mission is to protect your rights and your family by ensuring that powerful insurance companies fulfill their legal and contractual obligations to you.

While the Life Insurance Law Bloggers are primarily focused on life and property insurance matters, it is our priority to provide helpful information regarding many areas of civil claims and consumer law.  The information on this site may not apply to your state, as insurance laws vary from state-to-state.  The Life & Property Insurance Law Offices of Heather D. Lee are located in Florida, New York, Pennsylvania, and Colorado.  The information on the Life & Property Insurance Lawyer Blog is NOT and should NOT be construed as legal advice.  The information contained in this website does not create an attorney-client relationship between any person who reads such information and Heather D. Lee, Esquire and/or the Life & Property Insurance Law Bloggers.

For your free case evaluation, Contact Us to speak with an experienced life and property insurance attorney about the details of your claim today.