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Life insurance claims denied, families of vets sue feds, Prudential p2

Sat Jul 28th, 2012 on     Insurance Claims,    

We are continuing our discussion of a federal lawsuit filed against the U.S. Department of Veterans Affairs and Prudential. The insureds in the suit were veterans of the Armed Forces who committed suicice. Their families believe their suicides were the result of Post Traumatic Stress Disorder. They also believe that the VA and Prudential should have paid on the veterans’ life insurance policies. The VA and Prudential disagree.

The government carries an SGLI, or Servicemember Group Life Insurance, policy for active duty service members, as well as service members in training for active duty. When that service member separates from the military, he or she has the option to convert the policy to VGLI, or Veterans Group Life Insurance.

Naturally, there is a limited window of time for that conversion to take place. According to Prudential, the veteran has 120 days from the date he or she leaves the military to sign up for the new coverage. The veterans in this lawsuit did not convert within that 120 days. When the lead plaintiff’s son put his gun to his head and pulled the trigger, there was no life insurance policy in effect.

It was that lapse that prompted Prudential to deny the families’ claims. No coverage? No benefits.

Insurance companies can cancel or non-renew (an industry term of art) a policy, but the insurer must notify the insured in advance. For example, here in Florida, an insurance company may want to cancel your auto insurance policy. By law, the insurance company must notify you 45 days in advance and explain the reasons for the cancelation. (If the cancelation is for nonpayment of premiums, the notice period is just 20 days.) If an insurance company does not abide by the notice requirements, the original policy, at the same premium, remains in effect for 45 days after the notice is given or until the replacement coverage kicks in.

For these veterans and their survivors, the plaintiffs argue, none of this happened. They received word that their family members’ coverage had lapsed when they filed their claims. For that reason, the U.S. Department of Veterans Affairs and Prudential Financial Inc. should pay the claims, they conclude.

There is a second argument, though, and it may be more compelling. It is certainly more heartbreaking.

Continued in our next post.

Source: Courthouse News Service, “Prudential, USA Stiff Families of Suicidal Veterans, Kin Claim,” Cheryl Armstrong, July 12, 2012

Our firm handles similar situations to the one discussed in this post. If you would like to learn more about our practice, please visit our Miami Life Insurance Claim page.

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