This example involves the daughter-in-law of a man who built a successful HVAC company and who used careful estate planning to ensure all of his family members would be well provided for when he passed away.  The man was pre-deceased by his wife, so the insured distributed his bank accounts, life insurance policies, property, annuities and essentially all of his assets to family members.  The objective of his estate plan was to have everything smoothly transfer to his surviving loved ones without any disputes.

Prior to the insured’s death, his daughter-in-law became focused on the care of a child with a serious illness.  Because she was distracted by caring for her dying child, the daughter-in-law fell behind on some paperwork and failed to pay certain bills.  One of the bills she failed to pay was the premium on her father-in-law’s life insurance.  The insurance had originally been purchased more than seven years earlier and all prior premium payments were made on time. 

When the daughter-in-law sought to reinstate the policy, she was told that all that she needed to do was complete and submit a reinstatement form.  However, she was not informed by the insurance company that reinstatement would restart the clock on the two year contestability period.  The insured had developed cancer during the period that the life insurance policy was originally in place, but this was a non-issue had the premiums been paid on time.  However, the cancer was not disclosed during reinsstatement.  Four months after the policy was reinstated, the insured passed away.  Predictably, the insurance company denied the claim which put the daughter-in-law at-risk for losing the business and other property that had been transferred to her by her father-in-law.  In denying the claim, the insurance company wrote to the daughter-in-law: “Pursuant to state law, life insurance carriers review any claim that is filed within two years of the date the policy was originally issued or the date the policy was reinstated.  If during the review it is discovered that there were material misrepresentations regarding medical or other relevant information that would have prevented the life insurance carrier from originally issuing the policy or reinstating the policy, then the claim is denied.”

Make certain to pay your premiums on time to avoid the reinstatement trap.

You can reach Miami Life 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].

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