Most people don't realize it, but life insurance claims often get denied.
You will immediately ask :wait, how can an insurance company deny a life insurance, once a person actually dies?" It's the natural question of course, but life insurance is a little more complicated than that.
If you obtain life insurance through your employer, you are usually only asked to answer health related questions, if you apply outside of regular enrollment periods, or apply for supplemental benefits. If you buy life insurance on your own (as opposed to obtaining it through an employer), a complete insurance questionnaire/application is almost always required. That application asks a whole series of questions about the applicants health history. When misstatements are made on that application, such as when a smoker says he doesn't smoke, or a skydiver says she doesn't skydive, the insurer can often use that misinformation to invalidate the insurance -- even after the insured dies. Fortunately, California and most other states have "incontestability" laws which prohibit insurance companies from invalidating policies and refusing to pay benefits after a period of time. In California, life insurance policies become incontestable after 2 years. Some limitations apply, but for most cases, no matter what is on the insurance application, true or not, after 2 years in California, policies cannot be invalidated.
But, what happens when death occurs within the 2 year (or other) contestable period? Insurance companies routinely perform "contestability" analyses on life insurance claims when death occurs within that period. If they find any misstatement, even if slight, they will usually challenge the payment of benefits.
This is what happened to one of our clients very recently. Her husband passed away from lung cancer. Transamerica Life Insurance Company denied the large life insurance benefit claim alleging that the insured failed to reveal an earlier bout with cancer, shortly before he applied for the Transamerica policy. Transamerica was partially correct. But, upon analysis of all the facts and records, we learned that the insured was more truthful on his application, than not. While true he did not reveal the earlier "cancer" episode, he failed to do so because his doctor reported to him he had only a "pre-cancerous" tumor removed. The insured did in fact reveal on his application that he was hospitalized for removal of a mass. Transamerica ignored that information at the time, and instead just issued the policy without investigation. When an insurance company performs an application related investigation only after a death, it is referred to as "post-claim underwriting" and is almost always improper.
Partner Alan E. Kassan, Esq. and associate Mitchell Hefter, Esq. challenged Transamerica, and after presenting all of the facts and the applicable law on the subject, were able to eventually convince Transamerica to pay the claim. While getting the benefit paid certainly does not make up for the devastating loss of her husband, the life insurance benefits allow our client to avoid heaping financial distress on top of her grief...which is exactly what life insurance is supposed to do.
We have handled scores of life insurance claim denials. Call us, we can help! (800) 446-7529