Denied Life Insurance Claim

Understanding Life Insurance Contestability in New York: A Guide for Beneficiaries

Posted on by Trief & Olk
Dealing with a denied life insurance claim can be an overwhelming experience. As a beneficiary, you might feel lost, worried, or unsure about your rights and options. At Trief & Olk, we understand the emotional weight of this situation and are here to provide guidance and support. Life insurance is often intended to bring financial security during challenging times, but when a claim is denied, it can leave families feeling uncertain about the future. If you are navigating this difficult process, know that help is available, and there are ways to pursue the benefits you deserve.

Ted Trief (Partner)

Life insurance attorney since 1976

Barbara Olk (Retired)

Life insurance attorney since 1976

Eyal Dror (Associate)

Life Insurance Attorney since 2007

What Is Life Insurance Contestability in New York

Life insurance contestability refers to the two-year period following the issuance of a policy during which the insurance company can review and investigate claims. This timeframe allows insurers to examine the application for any inaccuracies, misrepresentations, or omissions made by the policyholder. The contestability period exists to protect insurers from fraudulent or misleading applications. In New York, if the insured person passes away during this contestability period, the insurer can conduct a thorough investigation before approving or denying a claim. This process may include scrutinizing medical records, financial information, and other relevant details. While contestability is a standard part of life insurance policies, it can create significant challenges for beneficiaries who may not understand why their claim is being delayed or denied.

Common Reasons for Denial During the Contestability Period

Life insurance claims may be denied for several reasons during the contestability period. One frequent issue is alleged misrepresentation on the insurance application. For example, if the insured person failed to disclose a medical condition, past health concerns, or certain lifestyle habits, the insurance company may argue that this information would have influenced their decision to approve the policy. Another reason for denial could be incomplete or inaccurate information. Sometimes, the insured may unintentionally leave out details that the insurer deems important. Insurers may also look into whether premiums were consistently paid, as a lapse in payment can lead to a denial.

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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

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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.”

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- Christopher Hughes

 In these cases, it is essential to understand that insurers must provide clear and specific reasons for their denial. They cannot arbitrarily reject a claim. Beneficiaries have the right to request a detailed explanation and supporting evidence from the insurer regarding the decision.

The Impact of Contestability on Beneficiaries

For beneficiaries, the contestability period can be a confusing and stressful time. After losing a loved one, navigating the legal and financial complexities of a denied life insurance claim can feel overwhelming. The delays caused by investigations often add to the uncertainty, leaving families struggling to cover expenses or plan for the future. It is important to remember that even if a claim is denied during the contestability period, beneficiaries are not without options. In many cases, insurers may misinterpret information or wrongfully deny claims. Beneficiaries have the right to challenge these decisions and seek legal assistance to ensure their rights are protected.

Life Insurance Denial Statistics

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.

How Contestability Differs from Fraud Investigations

While the contestability period allows insurers to investigate claims, it is distinct from accusations of fraud. Fraud involves intentional deception by the policyholder, such as knowingly providing false information to obtain a policy. In contrast, contestability investigations may focus on whether any errors or omissions occurred, regardless of intent. In New York, insurers have a higher burden of proof when alleging fraud. They must demonstrate that the insured knowingly misrepresented or concealed critical information with the intent to deceive. Beneficiaries should not assume that a denial during the contestability period automatically equates to fraud. Each case must be carefully reviewed to determine whether the insurer’s actions are justified.

What to Do If Your Life Insurance Claim Is Denied

If your life insurance claim is denied during the contestability period, the first step is to request a detailed explanation from the insurer. This will help you understand the reasons behind the denial and gather the necessary information to challenge it. Keep records of all correspondence, documents, and communications related to the claim, as these will be essential if you decide to pursue a legal case. Seeking legal representation is often the most effective way to address a denied claim. An attorney with experience in handling life insurance disputes can review the circumstances of your case, identify any flaws in the insurer’s reasoning, and advocate on your behalf. They can also negotiate with the insurance company to reach a resolution or file a lawsuit if necessary.

Settlements & Verdicts

$3 Million Policy

William Penn Life Insurance

$1.2 Million Policy

Primerica

$1.5 Million Policy

Metropolitan Life Insurance Company

$1 Million Policy

Protective Life Insurance

$675,000 Settlement

Confidential Settlement

$4.3 Million Policy

State Farm, Primerica, Farmers, BrightHouse

Challenging Misrepresentations and Errors in Applications

One of the most common reasons for a denied claim during the contestability period is an alleged misrepresentation or error in the original insurance application. However, not all errors are intentional, and many are minor oversights that should not disqualify beneficiaries from receiving the benefits. For example, a policyholder may have misunderstood a question or inadvertently provided outdated information. Insurers are required to prove that these errors were material to their decision to approve the policy, meaning the omission or misstatement must have significantly influenced the underwriting process. Beneficiaries have the right to dispute these claims and present evidence that the denial is unfounded.

Understanding Incontestability After the Two-Year Period

It is important to note that once the two-year contestability period ends, life insurance policies generally become incontestable. This means insurers cannot deny a claim based on application errors or misrepresentations unless they can prove fraud. Beneficiaries whose claims are denied after the contestability period should be aware of this distinction. If your claim was denied on the grounds of alleged misrepresentation and the contestability period has passed, you may have a stronger case for disputing the decision. Understanding the timing of your claim and the terms of the policy is crucial in determining your next steps.

How New York Law Protects Beneficiaries

New York has robust consumer protection laws in place to ensure that insurers act fairly and in good faith when investigating claims. These laws require insurance companies to provide clear explanations for claim denials and prohibit unfair practices. For instance, an insurer cannot delay a decision unnecessarily or deny a claim without substantial evidence. If you believe your insurance company is acting in bad faith, you have the right to take legal action. An attorney can help you identify violations of New York’s insurance laws and hold the insurer accountable for its actions.

How We Can Help You Navigate a Denied Life Insurance Claim

At our firm, we understand the challenges beneficiaries face when dealing with a denied life insurance claim. We are committed to providing compassionate and knowledgeable assistance to help you navigate this difficult process. From reviewing your claim to representing you in negotiations or court, we are here to ensure your rights are upheld. Life insurance policies are meant to provide peace of mind and financial security. When an insurer fails to honor its obligations, beneficiaries should not have to face this injustice alone. With the right legal support, you can take steps to challenge a denial and secure the benefits your loved one intended for you. If you are struggling with a denied life insurance claim, contact Trief & Olk for dedicated assistance. We are here to help you achieve the successful case result you deserve. Let us work together to address your concerns and bring clarity to this challenging situation.