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What Is Post-Claim Underwriting and How Can New Jersey Beneficiaries Fight It?

Posted on by Trief & Olk
Post-claim underwriting is a controversial practice used by life insurance companies after a beneficiary files a claim. It involves the insurer conducting further scrutiny of the insured’s medical history, lifestyle, and other factors that were disclosed during the application process. This examination often occurs after the insured’s death when the beneficiary submits a claim for life insurance benefits. The life insurance company may uncover discrepancies, omissions, or misrepresentations on the original application that could potentially lead to a policy being rescinded, or a payout being reduced or denied.
In most cases, when a life insurance policy is issued, it is based on the information provided by the applicant during the underwriting process. Insurers rely on this information to determine the applicant’s risk level and calculate their premiums. However, post-claim underwriting changes the dynamic by allowing insurance companies to revisit the policy and assess whether the individual was fully truthful during the application process. If the insurer finds any misstatements or omissions, even if minor, they may argue that the policy is invalid, leaving the beneficiary without the death benefit they are entitled to receive.

How Does Post-Claim Underwriting Affect New Jersey Beneficiaries? What Is Post-Claim Underwriting and How Can New Jersey Beneficiaries Fight It?

In New Jersey, as in many other states, post-claim underwriting can have a serious impact on beneficiaries. When a beneficiary files a claim for life insurance benefits after the death of a loved one, post-claim underwriting gives the insurer another opportunity to evaluate the policyholder’s medical and personal history to ensure that the policy was issued accurately. This practice has become more common in recent years as insurance companies look for ways to minimize payouts and reduce potential losses.

Ted Trief (Partner)

Life insurance attorney since 1976

Barbara Olk (Retired)

Life insurance attorney since 1976

Eyal Dror (Associate)

Life Insurance Attorney since 2007

 For New Jersey beneficiaries, this can create significant uncertainty. An insurance company may decide to rescind a policy, voiding it entirely, or it may contest the claim on the grounds that the insured misrepresented their health status, failed to disclose certain medical conditions, or made other material misstatements during the application process. If the insurer uncovers even a minor issue, they may claim that it was significant enough to warrant a policy cancellation. For many beneficiaries, this presents a significant challenge, as it may leave them without the death benefit they are depending on. New Jersey law offers some protections in cases where an insurer attempts to rescind a policy after a claim is filed, but the process of contesting a denial can be long and complex.

Can Post-Claim Underwriting Be Challenged?

Yes, post-claim underwriting decisions can be challenged. In fact, life insurance claim denials based on post-claim underwriting are often contested in court. Beneficiaries have legal rights, and New Jersey law provides mechanisms to fight back against unjust denials or rescissions of life insurance policies.

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 One of the first steps in challenging a post-claim underwriting decision is to thoroughly review the terms and conditions of the life insurance policy. Understanding the policy’s contestability period, which is the period during which the insurance company can investigate and rescind a policy based on fraudulent or incomplete information, is crucial. In New Jersey, the contestability period typically lasts for two years, but it may vary depending on the specific policy. If the insurer denies the claim based on alleged misrepresentation, it is important for the beneficiary to gather evidence that supports the validity of the claim. This could include medical records, statements from healthcare providers, and other documents that refute the insurer’s findings. The more documentation and evidence the beneficiary has to prove that the insured did not misrepresent any information, the stronger their case will be.

The Role of New Jersey Law in Post-Claim Underwriting Disputes

New Jersey law provides some protection for beneficiaries facing post-claim underwriting disputes. The state has strict regulations governing life insurance policies, and insurers are required to adhere to certain standards when reviewing claims. In cases where an insurer denies a claim or rescinds a policy based on post-claim underwriting, the beneficiary may be entitled to appeal the decision or pursue legal action. New Jersey’s Consumer Fraud Act is one example of how the state offers protection to individuals in insurance disputes. The act prohibits deceptive practices and misrepresentations by businesses, including insurance companies. If a life insurance company is found to have engaged in deceptive practices during the underwriting or claims process, the beneficiary may be able to recover damages under the act. Additionally, New Jersey courts have consistently held insurance companies to high standards when it comes to post-claim underwriting. If a beneficiary can prove that the insurer’s denial was unjustified, the court may rule in favor of the beneficiary and order the insurance company to pay the claim.

Steps to Take When Facing a Post-Claim Underwriting Denial

If a New Jersey beneficiary finds themselves in a situation where a life insurance claim is denied due to post-claim underwriting, it is important to act quickly and take the following steps:

Review the Insurance Policy

The first step is to carefully review the life insurance policy. Pay close attention to the contestability period and any exclusions or conditions that may apply to the policy. Understanding the policy’s terms is crucial for determining whether the insurer’s decision is valid.

Gather Documentation

Collect all relevant documentation, such as medical records, witness statements, and any other evidence that supports the validity of the claim. If the insurer claims that the insured misrepresented their health status or failed to disclose a condition, medical records can often provide crucial evidence to refute those claims.

Consult an Experienced Life Insurance Lawyer

An experienced New Jersey life insurance lawyer can help you navigate the complex process of challenging a post-claim underwriting denial. They can review the case, communicate with the insurance company, and advise you on the best course of action. In some cases, a lawyer may be able to negotiate a settlement with the insurer before resorting to litigation.

File an Appeal

If the insurer denies the claim, the beneficiary can file an internal appeal with the insurance company. Many insurers have an appeals process that allows beneficiaries to present additional evidence and challenge the denial. If the appeal is unsuccessful, the beneficiary may need to consider filing a lawsuit.

File a Lawsuit

If all other avenues fail, the beneficiary may need to file a lawsuit against the insurance company. In New Jersey, beneficiaries have the right to file a lawsuit if they believe their claim was wrongfully denied. A court can review the evidence and determine whether the insurer acted in bad faith or violated the terms of the policy.

Why You Need a Lawyer to Fight Post-Claim Underwriting Decisions

Navigating the legal complexities of post-claim underwriting disputes can be challenging, and beneficiaries often need legal assistance to secure the benefits they are entitled to. An experienced life insurance lawyer can help beneficiaries understand their rights, gather evidence, and build a strong case against the insurer. Trief & Olk, a law firm specializing in life insurance claim disputes, has extensive experience helping clients in New Jersey fight post-claim underwriting denials. The firm understands the intricacies of New Jersey insurance law and can provide expert legal representation throughout the appeals process and in court. If you are facing a life insurance denial or policy lapse due to post-claim underwriting, it is crucial to have a knowledgeable attorney on your side to fight for your rights. Post-claim underwriting is a practice that can significantly affect life insurance beneficiaries in New Jersey. While insurers may use it to assess the validity of a claim after the insured’s death, beneficiaries have legal recourse if their claim is denied. New Jersey law provides protections for beneficiaries, and with the right legal assistance, beneficiaries can challenge the insurer’s decision and secure the benefits they are entitled to receive. If you are facing a post-claim underwriting dispute, consutl Trief & Olk, we can help you navigate the process and fight for the payout you deserve.

To learn more about this subject click here: Life Insurance Claim Denials and “Post-Claim Underwriting”