Life Insurance Areas Of Dispute

Life insurance coverage is fairly straightforward.  If the insured dies during the policy term, the insurer pays the benefits.  The following reasons are some ways that disputes may arise:

  •  An agent may misrepresent the benefits of his insurer’s policy to induce the insured to switch from another company.
  • An agent may fail to disclose that health conditions may cause the insured’s application to be rejected.  If the insured was induced to let a rival policy lapse based on the expectations of replacement coverage, the insured may have no insurance.
  • The agent may fail to obtain coverage in time, and the insured dies without coverage.
  • The agent may present information or illustrations in a way that creates certain expectations about premiums or cash value, and then the policy does not perform as represented.
  • The insured may have certain medical conditions that would be material to the insurer’s decisions whether to offer insurance and at what price.  Because the agent fills out the application and wants the policy issued so she can earn a commission, the agent tells the insured that the answers are  not important, or the agent simply puts down the wrong answers.  When the insured dies, the insurer learns of the false answers and denies coverage.
  • The insured may have certain medical conditions that would be material to the insurer’s decisions whether to offer insurance and at what price.  Because the insured wants coverage and fears being rejected, the insured provides false, more favorable answers to health questions in the application.  When the insured dies, the insurer learns of the false answers and denies coverage.
  • The insured may give erroneous health answers that are material to the insurer’s risk but that are not made with the intent to deceive.
  • The insurer has several products — some more affordable, others that cost more but accrue cash value.  The agent fails to adequately explain the different options to the insureds, so they pay more for a policy that provides less coverage.  Or they buy a policy they cannot afford and it lapses, leaving them uninsured.
  • Although the insured was seemingly healthy at the time of the application and gave truthful answers, the insured’s health becomes materially worse before the policy is issued, thereby increasing the insurer’s risk.
  • The insurer receives a death claim, but suspects the insured is not really dead.
  • The insurer receives a death claim form a beneficiary who lacks an insurable interest.
  • The insurer may believe the beneficiary killed the insured.
  • The insurer receives competing claims by different putative beneficiaries.
  • The insured’s death may be from an excluded cause, such as suicide.
  • The insurer may wrongfully deny the claim, or may take too long to pay.