Life insurance is a vital safety net designed to provide financial security to beneficiaries after the loss of a loved one. However, the process of claiming these benefits can sometimes be fraught with challenges, especially when an insurance company denies the claim. In New York, navigating the complex landscape of denied life insurance claims requires understanding the reasons for denial and knowing the steps beneficiaries can take to resolve these issues effectively.
Why are Claims Denied?
One of the primary reasons life insurance claims are denied is the allegation of material misrepresentation. When applying for a life insurance policy, the policyholder must provide accurate and truthful information. Any discrepancies or omissions, whether intentional or accidental, can lead to a denial. For instance, failing to disclose a pre-existing medical condition or lifestyle habits such as smoking can be deemed material misrepresentation. Insurers argue that had they known the accurate information, they might have issued the policy on different terms or not at all. Beneficiaries faced with such denials need to review the application and supporting documents carefully to identify any potential misrepresentations and seek clarification or correction from the insurer.
Another common reason for denial is policy lapses due to non-payment of premiums. Life insurance policies require regular premium payments to remain active. If a policyholder misses payments and fails to rectify the situation within the grace period, the policy can lapse, leading to a denial of the claim. Beneficiaries should investigate whether the premiums were consistently paid and if any lapses occurred. In some cases, insurers might be willing to reinstate a lapsed policy if the missed payments are addressed promptly. Understanding the payment history and maintaining open communication with the insurance company is crucial in these scenarios.
Incontestability clauses present another layer of complexity in resolving denied life insurance claims. Most life insurance policies contain an incontestability clause, which prevents insurers from denying claims based on misrepresentations after a specified period, usually two years. If the policyholder passes away within this period, insurers might scrutinize the application more closely. Beneficiaries should check if the policy is beyond the incontestability period, as this could significantly impact the insurer’s ability to deny the claim based on misrepresentation. In such cases, insurers must honor the claim unless they can prove fraud.
Policy exclusions also play a significant role in claim denials. Life insurance policies often include specific exclusions that outline circumstances under which the insurer will not pay out benefits. Common exclusions include deaths resulting from suicide within the first two years of the policy, deaths related to criminal activities, or deaths occurring in high-risk occupations or activities. Beneficiaries should thoroughly review the policy to understand these exclusions and determine if the cause of death falls under any of them. If the exclusion is not clearly stated or seems ambiguous, beneficiaries may have grounds to contest the denial.
Appealing a Denial
Navigating the appeals process is essential for beneficiaries facing denied claims. Insurance companies typically offer an internal appeals process, allowing beneficiaries to present additional evidence or clarification supporting their claim. It is important to gather all relevant documents, including medical records, payment receipts, and any correspondence with the insurer. Submitting a well-documented appeal within the specified timeframe can increase the chances of a favorable outcome. Additionally, beneficiaries should be prepared for potential delays and understand that the appeals process can be time-consuming.
We contacted Trief & Olk to help us with a life insurance issue and Shelly Friedland was the attorney assigned to our case. Before Shelly took our case she explained to us that the likelihood of our success without going to court was possible but not likely. Unfortunately we did not get the outcome we had hoped for but it was our decision to not move forward and have our case litigated. Shelly is very knowledgeable and was very straight-forward in her assessment of our case as we moved forward. She was very patient and thorough in answering our questions. She always responded in a timely manner and listened to our concerns. We would certainly recommend Shelly and would use her firm again in the future.” - John Ramig If there is any possibility of winning your life insurance case – this is the place to do it for you. They are efficient, honest and will achieve the best possible outcome. Shelly Friedland worked on my case where a life insurance policy had lapsed and was even a few days beyond the grace period. Farmers had rejected my claim twice and was unwilling to take a second look. Shelly was able to get them to pay the entire claim without going to court, and the full amount was deposited in my account within a couple months. Highest recommendation.” - Kathleen Brown Trief & Olk is a superior law firm. Their attorneys and other legal professionals have a brilliant understanding of the law and the litigation process. They diligently perform their work in an efficient, strategic and cost-effective manner to ensure the best possible outcomes for their clients. - Christopher Hughes
Legal Action vs Mediation/Arbitration
Legal avenues provide another option for beneficiaries seeking to resolve denied life insurance claims. Consulting with an attorney who is knowledgeable in insurance law can provide invaluable guidance. Attorneys can review the policy, assess the validity of the denial, and help beneficiaries understand their rights. If the internal appeals process is unsuccessful, legal action might be necessary. Filing a lawsuit against the insurance company can be a complex and lengthy process, but it can ultimately lead to a resolution. Attorneys can advocate on behalf of beneficiaries, negotiate settlements, and represent them in court if needed.
Engaging in mediation or arbitration can also be a viable alternative to litigation. These alternative dispute resolution methods can provide a more streamlined and cost-effective way to resolve disputes with insurance companies. Mediation involves a neutral third party who facilitates negotiations between the beneficiaries and the insurer, helping them reach a mutually agreeable solution. Arbitration, on the other hand, involves a neutral arbitrator who reviews the case and makes a binding decision. Both options can expedite the resolution process and avoid the expenses and time associated with a court trial.
20% The annual average number of life insurance claims denied. $50 Million The yearly average dollar amount of claims denied by life insurance companies. .2% The number of claims appealed annually by consumers.Life Insurance Denial Statistics
Beneficiaries’ Rights
It is also important for beneficiaries to stay informed about their rights and the regulations governing life insurance claims in New York. The New York Department of Financial Services oversees insurance practices in the state and provides resources for consumers. Beneficiaries can file complaints with the department if they believe their claim was wrongfully denied or if they encounter unfair practices by the insurer. The department can investigate the complaint and, in some cases, assist in resolving the issue.
Keeping Records
Maintaining comprehensive records throughout the claims process is crucial for beneficiaries. Keeping copies of all documents related to the policy, correspondence with the insurance company, medical records, and any additional evidence can help build a strong case if the claim is denied. Organized documentation ensures that beneficiaries have all the necessary information readily available to support their claim and navigate the appeals process effectively.
The Statute of Limitations
Beneficiaries should also be aware of the statute of limitations for filing a lawsuit against an insurance company in New York. The statute of limitations sets a time limit within which legal action must be initiated. In New York, the statute of limitations for life insurance claim disputes is typically six years from the date of denial. Failing to file within this timeframe can result in losing the right to pursue legal action. Understanding this deadline is critical for beneficiaries considering legal recourse.
Contact Trief & Olk Today
Resolving issues surrounding denied life insurance claims in New York requires a comprehensive approach that includes understanding the reasons for denial, navigating the appeals process, and considering legal avenues when necessary. Beneficiaries must stay informed about their rights, maintain thorough documentation, and seek support from legal professionals or advocacy groups. While the process can be challenging and time-consuming, persistence and knowledge are key to achieving a favorable resolution.
For those facing denied life insurance claims in New York, seeking professional legal assistance can make a significant difference. Trief & Olk are here to help you navigate this complex process and fight for the benefits you deserve. Contact Trief & Olk today to discuss your case and explore your options for resolving your denied life insurance claim.