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 Posted: Tue Sep 22, 2009 12:44 am Post subject: Life insurance benefit denial clarification |
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My employee lost his mother due to a cerebral hemmorage about two weeks ago. He hasn't been denied the benefits of any policies yet as he has not notified them of the death. Are there policies that only pay on accidental deaths only or natural causes only but not both? In talking with relatives, he discovered that a cousin did not recieve benefits of 50,000 from his death. Apparently benefits were denied because he had drank one beer while cleaning his pool and in the process had a heart attack. He subsequently fell into the pool and drowned.
We are assuming they found water in his lungs and he died of the drowning before succumbing to the heart attack. This has given both of us cause to examine our life policies to see about exclusions. Is it possible this man had a life insurance policy only payable upon death due to natural causes and the insurer deemed that he died of the accidental drowning moments before he might have died from his heart attack.
Or are there clauses in life insurance policies that deny coverage because coincidental drinking of one beer that led to the drowning was attributed to the premature demise? Seriously, I am not making this up, we are looking for clarification to see if this usual and customary in the field of life insurance or are the decedents dealing with a corrupt insurer and need to file a complaint with the DOI.
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MikeoftheOzarks
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| Posted: Tue Sep 22, 2009 6:58 am Post subject: |
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| I guess they've considered it as his 'material misrepresentation' while applying for the policy. Simply put, I think he's misled the carrier by not disclosing his drinking habbits. It's quite possible, and that's what makes it so important for us not to hide facts from our carrier. |
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steven
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| Posted: Tue Sep 22, 2009 2:04 pm Post subject: |
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Are you saying that when you fill out an application for life insurance and it asks how much do you drink; you list the amount you imbibe at the time of the application. If your habit increases as you age from one beer every two days to two beers a day and you happen to be drinking at the same time you suffer a heart attack and fall into the pool, that the insurer could deny the benefits? Or even if you did not drink at the time of the application and you were not informed that the benefits could be denied if you begin a habit of occassionally drinking one beer or two a day, that the insurer could call that misrepresentation because you did not inform them that you began drinking three to five years after the policy was purchased?
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MikeoftheOzarks
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| Posted: Wed Sep 23, 2009 5:51 am Post subject: |
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A life insurance applicant has to go through medical tests that help determine his rate. It also sets an opportunity for the carrier to analyze the risk potential of the prospective client. So, it's always advisable that the client discloses his pre-existing conditions as well as his habbits to the carrier.
I guess for policy holders who enjoy a Termlife policy, adopting such habbits as smoking or drinking might lead to a higher rate or may even cause a non-renewal at some stage. But I'm not aware whether permanent life policy holders would lose in terms of their policy cash value if they resort to such habbits at a later stage. |
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steven
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| Posted: Wed Sep 23, 2009 8:15 pm Post subject: |
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If the policy was in force for two or more years before the death of the insured "material misrepresentation" and "pre-existing conditions" would have nothing to do with it.
I'm also not sure what the beer he drank before dying could have had to do with it.
While many have policies that cover only accidents and not death from natural causes, I've never heard of one that covered natural causes only and not accident. Unless it was a specific disease policy (cancer only policies are quite common for some strange reason).
Most likely is that your employee has the facts reversed and his cousin had what is called an Accidental Death policy, which would almost certainly have denied coverage on the basis that the heart attack was the proximate cause of his death.
Another important reason to be sure you and your loved one's know what kind of coverage you have, before it is too late. |
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Fishman
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| Posted: Wed Sep 23, 2009 9:52 pm Post subject: |
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Thanks, for responding, that makes logical sense.
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MikeoftheOzarks
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| Posted: Tue Oct 13, 2009 11:37 pm Post subject: |
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Fishman, great reply. I think that you hit it on the head with your post. As well, I don't know any life insurance application that specifically asks "how much do you drink?"
I've seen life applications that ask if a person has ever sought out or received treatment for addiction to alcohol or drugs...this would be a definite underwriting concern!
Your discussion regarding the incontestability provision was also right on target. An insurance company is only allowed to rescind coverage on a policy or cancel the coverage if there was a material misrepresentation or fraud on the application for insurance and the information was discovered within the incontestability period, which is normally two years.
If the insured died after the incontestability period, the insurer would have to pay the claim unless the death was excluded for other reasons.
Finally,
| Quote: | | I guess for policy holders who enjoy a Termlife policy, adopting such habbits as smoking or drinking might lead to a higher rate or may even cause a non-renewal at some stage. But I'm not aware whether permanent life policy holders would lose in terms of their policy cash value if they resort to such habbits at a later stage. |
Term life insurance policies that are renewable do NOT ask for proof of insurability or health upon renewal. You must simply pay the premium. As well, they are not normally allowed to reclassify an insured based on non-standard conditions that appear after the policy is issued.
Cash Value and permanent insurance policies have nothing whatsoever to do with this concern.
InsTeacher 
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InsTeacher
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| Posted: Sun Nov 15, 2009 9:09 pm Post subject: Death Benefit Denial |
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You would be shocked to know how many death claims get denied. What people don't realize is that when you file a death claim you entered a dog fight, so be prepared. The insurer will be looking for reasons not to pay the claim.
On the deceased's death certificate it may say "accidental", but there is often a "due to ..." statement as well. That is where claims get denied. The relevant questions are:
1. Was the policy an Accidental Death policy or not?
2. Was the policy employer-sponsored?
3. What was the medical history of the deceased?
If the policy was not an AD&D policy the cause of death shouldn't be an issue as a cerebral hemorage is an unexpect cause. If the coverage was employer sponsored it will be governed by ERISA law, which is very specific. If the claim is denied he will have one chance to appeal, so he needs to be thorough. The insurer will be looking for "other contributing factors" so getting a copy of medical records, and having them reviewed by an expert will be critical.
You should encourage him to get expert help so he receives the money his mother intended him to get. |
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LifeInsuranceDisputes
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