Life insurance provides financial security and peace of mind to families and loved ones. When policyholders purchase life insurance, they expect that their beneficiaries will receive the promised payout in case of an untimely death. But what happens if there is a dispute over the life insurance claim? In New Jersey, various laws govern life insurance disputes, helping families and insurers navigate these challenging situations. Knowing the basics of how New Jersey handles life insurance disputes can empower policyholders and beneficiaries to understand their rights and protect their financial interests. This guide covers the essentials of New Jersey’s approach to life insurance disputes, including common types of disputes, legal grounds for denial, and ways beneficiaries can respond. At, Trief & Olk , we are here to guide you through the legal process and help you navigate the complexities of your case.
Understanding Life Insurance Disputes in New Jersey
Life insurance disputes can arise for many reasons, often causing stress and confusion for beneficiaries. In New Jersey, when a dispute occurs, it usually involves either the insurer denying a claim or a disagreement over the terms and conditions of the policy. The life insurance industry operates under strict rules and regulations, and New Jersey follows both federal and state laws to protect consumers. These laws ensure that insurance companies act fairly and do not unfairly deny claims.
Life insurance disputes can involve issues like non-payment of premiums, misrepresentation on the insurance application, or exclusions in the policy that might affect the payout. Insurers may deny claims if they find any inconsistencies or if they believe the policyholder did not fully disclose important information. When beneficiaries believe their claim has been unfairly denied, they have the option to dispute the denial. Knowing how to navigate the claims process and understanding common reasons for denial can help beneficiaries make informed decisions and take steps to protect their rights.
Common Types of Life Insurance Disputes
In New Jersey, life insurance disputes often fall into specific categories, each with its own unique challenges. One common type of dispute arises when the insurer believes the policyholder misrepresented information on the application. Misrepresentation might include failing to disclose a pre-existing medical condition or any other fact that could impact the risk level. Insurers argue that if they had known this information, they might have chosen not to issue the policy or charged a higher premium. If the insurer discovers this information after the policyholder’s death, it may deny the claim based on misrepresentation.
Another frequent cause of life insurance disputes in New Jersey is non-payment of premiums. Most life insurance policies require regular premium payments to remain active. If the policyholder fails to make these payments, the policy may lapse, meaning it is no longer in effect. In such cases, beneficiaries might be denied the death benefit because the policy was not active at the time of the policyholder’s death. However, there are often grace periods for missed payments, and some policies offer reinstatement options.
In some cases, disputes arise due to policy exclusions. Certain life insurance policies contain specific exclusions, which are circumstances in which the policy will not pay out. For instance, many policies have exclusions related to suicide, drug use, or deaths that occur while committing a crime. If the policyholder’s death falls under one of these exclusions, the insurance company might deny the claim. Beneficiaries should always review the policy’s terms and exclusions to understand any circumstances that might prevent payment.
Legal Grounds for Life Insurance Claim Denials
In New Jersey, insurance companies are required to have valid legal grounds for denying a life insurance claim. These grounds must be based on the terms of the insurance contract or related state and federal laws. One of the primary reasons insurers deny claims is because of an alleged misrepresentation. If an applicant misstates significant information, the insurer can argue that the contract is void because it was based on inaccurate information.
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
Another common legal ground for claim denial is policy lapse due to unpaid premiums. Life insurance policies require policyholders to make regular premium payments to keep the policy active. If premiums are not paid, the insurer may terminate the policy. However, insurers must follow specific rules regarding policy termination, including notifying the policyholder and providing a grace period. New Jersey law also mandates that insurers provide notice before canceling a policy, ensuring that the policyholder has a chance to rectify the situation.
Exclusions are another legal basis for claim denial. When policyholders purchase life insurance, they agree to the exclusions outlined in the policy. If the death of the policyholder is connected to an excluded risk, such as self-inflicted harm or criminal activity, the insurer has the legal right to deny the claim. These exclusions are clearly stated in the policy and serve as a contract between the insurer and the insured.
The Contestability Period in New Jersey
The contestability period is an important aspect of life insurance policies in New Jersey and across the United States. This period usually lasts for two years from the date the policy takes effect. During the contestability period, the insurance company can investigate the information provided on the insurance application and potentially deny a claim if it finds inaccuracies. This period is designed to protect insurers from fraudulent claims, allowing them to confirm that the policyholder accurately disclosed all necessary information.
After the contestability period expires, insurers have far less freedom to deny claims. At this stage, they generally cannot deny claims due to minor misrepresentations or inaccuracies on the application. However, if an insurer discovers intentional fraud, such as false information about the policyholder’s age, the contestability period does not protect the policyholder, and the insurer may still have grounds to deny the claim. Understanding the contestability period can help beneficiaries understand their rights if a claim is disputed.
Settlements & Verdicts
Steps Beneficiaries Can Take if a Claim Is Denied
When an insurance company denies a life insurance claim, beneficiaries in New Jersey have options to challenge the decision. The first step is to carefully review the denial letter, which should explain the reason for the denial. Understanding the insurer’s reasoning allows beneficiaries to determine whether they have grounds to dispute the denial. If the denial is based on a specific policy term or exclusion, beneficiaries can review the policy document to see if the insurer’s interpretation aligns with the policy’s language.
Once the beneficiaries understand the reason for denial, they can gather evidence to support their claim. This might include medical records, payment receipts, or other documentation that shows the policy was active and valid at the time of the policyholder’s death. Beneficiaries may also need to prove that there was no misrepresentation on the application or that the policyholder complied with the terms of the policy.
If the denial cannot be resolved through direct communication with the insurer, beneficiaries have the option to file a formal appeal. This process often involves submitting additional documentation and requesting that the insurer re-evaluate the claim. If the appeal is unsuccessful, beneficiaries can consider filing a lawsuit. In New Jersey, beneficiaries have legal rights that allow them to seek assistance through the court system if they believe the insurance company has acted unfairly or in bad faith. This step may require the support of legal professionals who are familiar with New Jersey insurance laws.
Bad Faith Claims in New Jersey
New Jersey law protects consumers from insurance companies that act in bad faith. If beneficiaries believe that the insurance company has unreasonably denied a claim, they may have grounds to file a bad faith claim. Bad faith occurs when an insurer refuses to pay a legitimate claim without a valid reason, or if they delay the payment unnecessarily. New Jersey law allows beneficiaries to hold insurers accountable for bad faith practices by seeking damages through the court system.
When pursuing a bad faith claim, beneficiaries must show that the insurer did not have a reasonable basis for denying the claim and that it acted unfairly toward the policyholder or the beneficiaries. Bad faith claims can be complex, requiring thorough knowledge of New Jersey insurance laws. Beneficiaries who believe they have a bad faith claim should consider seeking legal guidance to understand their rights and options.
Navigating life insurance disputes can be challenging for beneficiaries who are already dealing with the emotional loss of a loved one. Disputes can add stress and confusion, making it difficult to focus on securing the benefits owed. Understanding the legal landscape of life insurance disputes in New Jersey is essential to ensuring that beneficiaries receive fair treatment and the financial support they are entitled to. Whether the dispute involves misrepresentation, policy lapse, or an exclusion, beneficiaries should know their options and rights under New Jersey law.
If you are facing a life insurance dispute in New Jersey, Trief & Olk can help you navigate this complex process. Our team understands the intricacies of New Jersey insurance law and can work with you to pursue the benefits that you and your family deserve. Trief & Olk is committed to protecting your rights, offering personalized guidance and support tailored to your unique situation. Reach out to Trief & Olk today to learn more about how we can assist you with your life insurance dispute and help you take the steps necessary to protect your financial future.