When a TransAmerica life insurance claim for $200,000 was initially denied due to a material misrepresentation on the application, many would have assumed the case was lost. However, we fought hard to resolve the issue and secured a settlement, providing our client with a check within just 11 days.
If you've recently received your life insurance policy, you may feel a sense of security, but what if your coverage is denied later on? This situation becomes even more troubling if the denial stems from a so-called "material misstatement" made during the application process. However, it's important to understand that life insurance companies are not always correct in their denials, and there are legal steps you can take to fight back.
What is the Contestability Period?
Most life insurance policies have what’s known as a “contestability period.” This is the window of time—usually one to two years from the policy’s issue date—during which the insurance company can cancel the coverage or deny claims if they discover material misstatements or omissions on the application. It’s a critical time, as life insurers can invalidate your policy based on something as simple as failing to disclose a health condition or misrepresenting information.
If you don’t fully disclose your health history or other important details on the application, even unintentionally, the insurer may argue that they wouldn’t have issued the policy had they known the truth. This can lead to the denial of your claim or a policy being canceled during the contestability period. However, once this period expires, the insurer cannot contest the policy, and they are obligated to pay the benefits, unless there was fraud involved.
Understanding Material Misstatements
Material misstatements refer to significant inaccuracies or omissions made on your life insurance application that could influence the insurer's decision to provide coverage. A misstatement might include failing to disclose a past medical condition, smoking habits, or risky activities that could increase the likelihood of a claim. Even a small mistake can be considered material by the insurer, potentially leading to a claim denial.
In our case, the $200,000 claim was initially denied due to an alleged material misstatement about the applicant’s health history. The applicant had failed to mention a past medical condition, which the insurer argued would have influenced their decision to issue the policy. However, after careful investigation and legal action, we were able to demonstrate that the misstatement was not material to the underwriting process. As a result, the claim was reinstated, and our client received the full benefits in just 11 days.
How to Avoid Contestability Issues in Life Insurance
The best way to prevent contestability issues is by being completely transparent and honest on your life insurance application. If there’s any doubt about your health history, it’s crucial to disclose it. While this may increase your premiums, it will provide peace of mind knowing that your beneficiaries will receive the benefits they’re entitled to when you pass.
If your life insurance policy has been denied or voided due to a material misstatement during the contestability period, you have legal recourse. Often, these denials are made in bad faith, and you should consult with a skilled life insurance attorney who can help you determine if you have a valid claim and take the necessary steps to appeal or litigate the denial.
Our life insurance lawyers specialize in handling denied life insurance claims. We’ve helped thousands of clients win their cases, ensuring they receive the benefits they deserve. If your claim has been denied or delayed, contact our team today for a free consultation. Let us fight for the compensation you’re entitled to.
Sources:
Insurance Information Institute (III): Provides general information about life insurance, including coverage and exclusions that might apply.
National Association of Insurance Commissioners (NAIC): Offers resources outlining important policy rules, including contestability periods and exclusions in life insurance policies.