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Life insurance is a contract that states that, in exchange for a premium payment, the insurance company promises to pay the policy amount, in the event of the insured person’s death. There are several different names and variations on different types of life insurance policies; however, the majority of policies are of one of two basic types of policies: term life insurance or whole life insurance.
Term life insurance pays the face amount of the policy in the event of death within a certain number of years, as specified in the insurance policy. A term policy can be written for any period of time, but 10, 20, or 30 years is typical. If the person survives after the term has passed the policy terminates, and no benefits are owed. Term insurance is generally cheaper than whole life because the policy does not build any cash value and provides protection for a limited time.
Whole life insurance offers protection from the time the policy is placed until the age stated in the mortality table used, often 90 or 100 years. Whole life also builds cash value during the premium-paying years. This allows for a level premium payment over the insured’s life, as premiums would normally rise as the risk or mortality increased with age. There are many varieties of whole life where the payments may be front loaded over 10, 20, or 25 years. Universal life insurance is another type of whole life where the premiums can fluctuate depending on various factors and choice of the purchaser.
There are also specialty products, such as credit life and accidental life insurance, which will pay a debt upon death or pay a death benefit if a death is accidental.
Regardless of the type of policy sold, the basic promise is the same, and while the policy is in effect a payment is due if the named insured dies. This basic promise is sold in America, and many people consider the financial protection offered by a life insurance policy a prudent and responsible thing for spouses and parents to have to insure their families and children’s financial well-being. Businesses use life insurance to protect against the loss of key personnel and to create funds to purchase a business. Life insurance contracts are also used in estate planning and can be used to provide a tax-free inheritance.
If you have lost a loved one and the insurance company is refusing to pay your life insurance claim, you need legal assistance from a Columbia insurance attorney. After paying the premiums, the last thing that should happen is the insurance company denying payment, but it does happen. Life insurance claims are denied because companies claim that misrepresentations were made on the application, that the premiums were not paid, or an exclusion prevents coverage.
Our law firm has experience in handling life insurance claim denials. We have helped widows and children collect life insurance policies denied because of alleged misrepresentations in applications, alleged lapses of payment in universal life, and vanishing premium policies. We have helped our clients fight and win life insurance denials under accidental death and credit life policies.
An incontestability clause is a clause in your insurance policy which states that your insurance company will not deny a claim on the basis that you misrepresented a fact on the application for insurance. Typically, the policy must be in effect for a term time before the incontestability clause applies. The most common time period is 2 years. If no such clause is in your policy then the insurance company can always deny a claim if it can show that you made a misrepresentation on the application, even if you have been paying premiums to the insurance company for years. However, you may be able to get the insurance company to reimburse your premium payments.
If you missed a life insurance premium payment that does not mean your policy is canceled. Most policies contain a grace period, usually 30 days in order for you to make the payment. Furthermore, policy cancellation is tightly regulated by the states, and an insurance company must follow the notice rules correctly or the cancellation will not be valid.
Sometimes insurance companies try to settle life insurance claims for less than is owed under the policy terms, claiming that there is a deficiency or an irregularity in the application. If this happens you should immediately contact an attorney to help you investigate the facts and advise you of your legal rights.
Insurance companies are supposed to pay the life insurance policy to the named beneficiaries. However, where there is evidence that the insured did not intend to leave a person as a beneficiary, such as after a divorce or death, a court can use its equitable powers to change the beneficiary designation. You will need an experienced Columbia insurance attorney to help you determine if the necessary evidence exists and then to file a law suit to have yourself named a beneficiary.
Some life insurance polices only cover for accidental death. Generally it is clear whether a death is accidental or not. However, in many clear accidental death claims, insurance companies will deny that the death was accidental. A common example is when someone dies in a car accident but alcohol is involved, the insurer may take the position that because the driver voluntarily intoxicated themselves the death was not an accident. If an insurance company is contesting a claim on this basis, you need immediate legal help.
All insurance policies contain exclusions of coverage. However, just because the insurance company claims exclusion does not mean they are correct. Insurance companies often take a view that is favorable to the insurer, and they fail to consider the law which requires an interpretation that favors coverage, if there is an uncertainty of meaning or ambiguity. There may be other ways to defeat the exclusion, including issue of cause of death where there are multiple causes, or proving that the exclusion may be inconsistent with the company’s marketing materials, which would cause it to be a misrepresentation, or create an ambiguity that would allow coverage to be resolved in your favor.
