Life Insurance Claims

Experienced Life Insurance Attorneys need to understand the areas of dispute that arise in the context of life insurance.

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

a.  The life insurance agent may misrepresent the benefits of his insurer’s policy to induce the insured to switch from another company.

b.  A life insurance 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 expectation of replacement coverage, the insured may have no insurance.

c.  The life insurance agent may fail to obtain coverage in time, and the insured dies without coverage.

d.  The life insurance 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.

e.  The insured may have certain medical conditions that would be material to the insurer’s decision  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 wrong answers.  When the insured dies, the insurer learns of the false answers and denies coverage.  This is the single most common reason for disputes and knowledge of the Texas Insurance Code, the Texas Administrative Code, and Texas common law is vital.

f.  The insured may give erroneous health answers that are material to the insurer’s risk but that are not made with any intent to deceive.

g.  The life insurance company 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 its lapses, leaving them uninsured.

h.  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 issued, thereby increasing the insurer’s risk.

i.  The life insurance company receives a death claim, but suspects the insured is not really dead.

j.  The life insurance company receives a death claim from a beneficiary who lacks an insurable interest.

k.  The life insurance company may believe the beneficiary killed the insured.  In this situation look to Texas Insurance Code, Sections 1103.151 and 1103.152.

l.  The life insurance company receives competing claims by different putative beneficiaries.  In this situation look to Texas Insurance Code, Sections 542.058(c).

m.  The insured’s death may be from an excluded cause, such as suicide, drugs, alcohol, or specifically excluded medical conditions.

n.  The life insurance company may wrongfully deny the claim, or may take to long to pay.  The Prompt Payment of Claims Act is helpful to claimants in this situation.

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