Common Causes of Life Insurance Disputes

Thu Aug 24th, 2023 on     Insurance Law,    

Losing a loved one can affect every aspect of your life, and the last thing you expect is to have your valid life insurance claim denied. When it is, you are not only facing grief but also bills and other invoices that you expected to have the money to pay but now cannot. At VPM, we assist policyholders who have had their claim denied get the benefits to which they are entitled. There are different reasons why insurance companies deny valid life insurance claims and speaking with a Miami insurance litigation lawyer from our firm can help you understand why this has happened. 

First and foremost, it is important to be aware of the incontestability statute. 

Florida’s Incontestability Statute

Florida Statute 627.455 states that “(e)very insurance contract shall provide that the policy shall be incontestable after it has been in force during the lifetime of the insured for a period of 2 years from its date of issue except for nonpayment of premiums and except, at the option of the insurer, as to provisions relative to benefits in event of disability and as to provisions which grant additional insurance specifically against death by accident or accidental means.”

This statute recognizes the unfairness that would result from allowing an insurance company to deny a claim when a person has paid their premiums for years. Therefore, once the premiums have been paid for two years, there are only certain reasons why an insurance company can contest a claim. If you are not sure if your insurance company has violated this statute, contact our firm and schedule an appointment with a Miami insurance litigation lawyer

The Incontestability Statute Premiums Exception

One of the main reasons an insurance company can still contest a life insurance claim after the two-year period has expired is because the premiums have not been paid. A life insurance premium is the money you pay to the insurance company to keep the insurance policy. Premiums can be paid monthly, annually, or according to any other contracted schedule you have entered into with the insurance company. The key is to make sure they are paid in full and on time to prevent a life insurance claim denial. 

There are some other narrow exceptions to the incontestability statute that are best explored and explained by a Miami insurance litigation lawyer

Disputes & Denials Within The Two-Year Period

If the death of the insured occurs within two years of the issuance of the policy, the insurance company is able to deny or dispute the life insurance claim for different reasons, including the initial application being filled out incorrectly. The insurance company can and will review the application as well as any accompanying documents or information provided. If they are able to show that there were any material misrepresentations made on the application, the insurance company can deny the claim and rescind the policy. 

Keep in mind that insurance companies typically take a closer look at deaths that occur shortly after the issuance of the policy. They are extra wary and search for evidence of foul play. 

Disputes Regarding Beneficiaries

There are times when the insurance company does not dispute that they should pay the life insurance claim, but they are not clear to whom the life insurance proceeds should be paid. When this occurs, the proceeds from the policy may be placed into an account with the court while the court determines who is legally entitled to them. There are many different reasons why confusion over who is entitled to the funds occurs, including those listed below. No matter the reason, however, when your ability to collect on a life insurance policy is in jeopardy, you should speak with a knowledgeable Miami insurance litigation lawyer.

Lack of Capacity

If the policyholder lacked the mental capacity to designate a beneficiary, there may be a question regarding who is entitled to the funds. In order to designate a beneficiary, a person must meet the same standard of mental capacity as they would if they were entering into a contract. 

Undue Influence

If there is a question as to whether or not someone unduly influenced the policyholder regarding who they named as their beneficiary, it is best to speak with a Miami insurance litigation lawyer. This is a more common occurrence with elderly policyholders. 

Divorced Spouse

When people divorce, they typically do not want their ex-spouse to remain the beneficiary on their life insurance policy. There is a statute in Florida that addresses the situation of a named beneficiary being an ex-spouse, and when a divorce decree has been entered, this beneficiary designation is considered void. However, there are exceptions that should be addressed with a Miami insurance litigation lawyer.

Improper Change of Beneficiary

A policyholder may attempt to change a beneficiary but fail to properly do so. For example, they may state in their Will that they want to change the beneficiary but fail to change it in the actual policy. 

Failure to Comply With An Outside Agreement

People sometimes enter into outside agreements to keep a certain amount of life insurance with the other person as the named beneficiary. For example, a divorcing couple may agree that one spouse maintains a life insurance policy with the other spouse as the named beneficiary. 

Failure to Clarify

One of the ways beneficiary disputes arise is when the policyholder has failed to clearly designate who they want the beneficiary, or beneficiaries, to be. By listing simply “children,” do they mean biological children only, or are step-children included? Ambiguity can create confusion and in some cases, claim denials. 

Speak With A Miami Insurance Litigation Lawyer At VPM Today

If your life insurance claim has been denied, contact our firm and schedule a consultation with a Miami insurance litigation lawyer. We are attorneys who focus our practice on policyholders who have had their claims denied or delayed, and we are here to help. We may be reached via our contact page.

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