Denial Of Life Insurance Benefits

Life insurance claims that are denied by an insurance company should always be put in front of an attorney who handles life insurance claims.  The vast majority of the time an attorney experienced in handling life insurance claims can help.
Here is a 2005 opinion from the Fifth Circuit Court of Appeals that serve as an example of why claims denials should be presented to an experienced life insurance lawyer.  The opinion is styled Monumental Life Insurance Company v. Hayes-Jenkins.
Here are the Facts:  In November 2000, the insureds, husband and wife, purchased a house executing a mortgage note and an escrow agreement with the lender.  Two months later the lender, by agreement with the insurer, mailed an unsolicited application for a mortgage life insurance policy underwritten by the insurer.  All the enclosed materials promised a payoff of the mortgage balance up to $300,000 in the event of one of the insured’s death and emphasized a “no risk” 30 day trial.  The insureds promptly completed and mailed the application.  The husband died four days after the policy became effective, but before the mortgage company issued the first month’s premium payment and the wife demanded that the proceeds of the mortgage policy be applied to liquidate the remaining loan balance pursuant to the terms of the policy.  The insurer refused and filed a declaratory judgment action seeking a ruling that at the time of the husband’s death the policy was not in forced for failure by the insured to pay the required premium.  The wife counterclaimed against the insurer for breach of contract and violations of the Texas Insurance Code and DTPA.  She also filed a third-party complaint against the mortgage lender asserting claims for breach of the escrow agreement, negligence, and violations of the DTPA and Insurance Code.  The district court granted the insurer and the lender’s motion for summary judgement, dismissing all of the wife’s counterclaims and third party claims and this appeal followed.
The Fifth Circuit Court of Appeals reversed summary judgment in favor of the mortgage company and the insurer, finding that genuine fact issues existed on the breach of contract and insurance code and DTPA violations claims.  however, the court affirmed the district courts’ dismissal of the negligence claim against the lender.  After examining a cover letter from the mortgage company, the insurer’s marketing materials, and the policy itself and considering the “totality of these writings,” the court concluded that fact issues existed as to whether the insurer waived the requirement that the first premium be paid before coverage could be effective.  Agreeing with the insured that Texas law did not recognize waiver as a means to “enlarge the risks” or to “create a new and different contract,” the court held that an insurer an waive a “condition precedent” to coverage by such as the prepayment of the first premium as in this case where it unconditionally approved the insureds’ application with an effective date “prior to receiving … first premium payment … and in the full knowledge that under its arrangement with the mortgage company, the Jenkins’s could not possibly have been invoiced until sometime after the effective date of the policy.”  Similarly, the court found that the insurer may be stopped to deny coverage prior to receipt of the first premium payment because the insured’s may have relied to their detriment on the insurer’s numerous and consistent representations in their letters and promotional materials that the insured’s would be “fully covered” during the 30-day “no risk” policy examination period.
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