Life insurance often constitutes an indispensable hedge against the premature loss of a family member responsible for earning the bulk of the household income. Whether the policy is purchased on a stand-alone basis or part of a comprehensive estate planning strategy, the benefits will be counted on to allow surviving loved ones to maintain their standard of living. Although many policyholders recognize that claims under other types of policies often are denied, they are surprised to learn that the benefits of a life insurance policy can be denied after the insured has passed away.
The process of obtaining life insurance varies significantly depending on how the insured obtains the policy. If your life insurance policy is provided to you by your employer, you typically will not be asked to answer health related questions unless you apply outside the regular enrollment period. However, the application process and information you must provide is far more complicated when you purchase a life insurance policy directly from an insurance company outside of the employment relationship. This application process is a potential minefield because omitted or misstated information in the application can result in a denial of benefits when a claim is filed following the death of the insured.
This situation obviously can be open to abuse because an insurer might accept premium payments for a prolonged period and only investigate the accuracy of information in the application after a claim is filed. This practice is referred to as “post-claims underwriting.” Florida and most other states have laws that limit this unfair practice by requiring insurance companies to raise such objections during a “contestability period.” In Florida, life insurance policies become incontestable after two years subject to certain exceptions. Generally, an insurer cannot invalidate a life insurance policy after the policy has been in effect for two years regardless of whether the information provided in the application is true or false, with limited exceptions.
During the contestability period, the insurance company can investigate the claim and information provided on the application regarding medical history, finances, smoking history, employment history, and other relevant facts to ensure the underwriting decision was predicated on accurate information. When purchasing a life insurance policy an insured should never lie or withhold relevant information that is responsive to questions on the application because it is never advisable to gamble that you will survive the contestability period.
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].
