Life insurance policies are typically contingent on the accuracy of the information provided in the application. In cases where policyholders are asked to reaffirm their health status—especially during the reinstatement of a lapsed policy—misrepresentation can lead to denied claims. A significant case illustrating this involves a widow who was denied a death benefit claim of $1.2 million after her husband's failure to disclose a brain tumor during his policy’s reinstatement process.
The Case of the Denied Life Insurance Claim
The policy in question was issued in December 2006, but it lapsed in April 2007 due to unpaid premiums. As part of the reinstatement process, the insured submitted a form on April 20, 2007, along with overdue premium payments. The form required him to confirm whether he was in the same health as when the policy was initially issued. Importantly, he was asked about his last medical treatment and the findings.
However, the insured failed to disclose crucial information. He answered that his last treatment was in February 2006 with normal results. In reality, he had recently visited a neurologist who discovered a large, aggressive brain tumor through an MRI. This omission led the insurance company to question the accuracy of the information provided, and ultimately, the life insurance company denied the claim after his death.
Why the Denial Happened
The insurer argued that the misrepresentation of the insured’s health status—specifically his failure to disclose the brain tumor—voided the policy. The widow contested this, arguing that a valid contract had been formed once the insurer accepted the premium payments after the reinstatement form was submitted.
Lessons Learned from the Case
Importance of Full Disclosure: When reinstating a life insurance policy, it's crucial to provide truthful, detailed information about your health history. Even a small omission can lead to significant consequences, as seen in this case.
Reinstatement Is Not a Simple Process: Reinstating a lapsed policy requires clear and accurate communication with the insurer. Any discrepancy or omission—especially concerning serious medical conditions—can lead to a claim denial.
Legal Assistance Can Help: Even when it seems like the insurer has a solid case, having an experienced life insurance lawyer can sometimes turn the case around. If you or a loved one face a denied claim, legal expertise could be critical in ensuring justice is served.
If you or your loved one’s life insurance claim was denied due to a misrepresentation during reinstatement, it’s important to consult with an experienced life insurance lawyer. Our team has successfully helped thousands of clients recover denied death benefits, even in challenging cases. Don't hesitate to contact us for a free consultation to discuss your case.
Sources:
"Understanding Life Insurance Policy Reinstatement and Misrepresentation." National Insurance Review, 2023.
"How Courts Handle Misrepresentation in Life Insurance Claims." Insurance Law Journal, 2022.