Common Reasons Beneficiaries of Life Insurance Policies in Florida Receive Denial Letters

J.P. Gonzalez-Sirgo
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Founder of J.P. Gonzalez-Sirgo, P.A.

When a beneficiary receives a denial letter indicating that a deceased spouse’s policy will not result in the payout of death benefits, the emotional and financial impact can be devastating.  The primary objective of life insurance is to provide for surviving family members especially when a family breadwinner passes away.  When these expectations are frustrated, families can struggle to continue to afford the family home and maintain their existing standard of living.  In this blog post, our Miami Life Insurance Claims Law Firm highlights the typical reasons a policy is denied.

The Manner of Death is Not Covered by the Policy: Although many life insurance policies cover accidental death, some policies do not cover the death of an insured that occurs under these circumstances.  Further, the vast majority of policies do not cover self-inflicted deaths (i.e., suicide).  Predictably, policies also do not cover situations where the beneficiary causes the death of the insured.  When purchasing a life insurance policy, consumers should carefully review the circumstance under which the death of the policyholder will not result in payment of benefits.

Deaths in the Contestability Period: If the death occurs during the contestability period (2 years in Florida), the life insurance carriers can elect to return the premiums and rescind the policy if information in the application is misleading or not truthful.  However, the period can be shorter, such as one year depending on the state. The rationale behind this period is to allow the carrier a reasonable period to conduct the underwriting process and assess risk while not permitting the insurer to sit back and collect premiums indefinitely.  This scenario would be extremely unfair to an insured because the insurer could scour an application for discrepancies after accepting premiums for many years.

Death Occurs Immediately after Purchase of the Policy: While a death that occurs within months of the purchase of a life insurance policy can simply be the product of coincidence, insurance companies will investigate closely under these circumstances.  The insurance company will be on the lookout for potential foul play or fraud.

Denials Based on False Information: Although this point is briefly mentioned above, it bears further discussion because it constitutes the most common rationale for a denial of coverage.  Life insurance benefits are frequently denied based on a material misrepresentation. The precise definition of a material misrepresentation will depend on the policy language and state law.  Generally, the term refers to a misrepresentation, lie, or non-disclosure that would have led to the insurer refusing to issue the policy based on the same premium and policy limits.  Applicants for a life insurance policy should be truthful.  If you are encouraged by a broker or agent to stretch the truth or omit information, find yourself another broker or agent.  Do not lie on the application.

You can reach Miami Insurance Claims Lawyer J.P. Gonzalez-Sirgo by dialing his direct number at (786) 272-5841, calling the main office at (305) 461-1095, or Toll Free at 1 (866) 71-CLAIM or email Attorney Gonzalez-Sirgo directly at [email protected].

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