What the Heck is a Contestable Life Insurance Claim?
If you have made a claim for life insurance benefits within the first two years of the policy date, chances are your claim is “contestable” and is undergoing a “contestability investigation.” You probably received a letter from the insurance company plainly stating that the claim was under investigation, and then you promptly began to panic and feverishly google what that might mean. As an attorney who helps clients through these contestable claims, I have seen what they look like from both sides. Let me explain.
Every life insurance policy a person can get these days has what is called a “contestability period”. The policy likely defines contestability or incontestability similar to this: “We cannot contest this policy have it has been in force during the insured’s lifetime for two years from the policy date except for non-payment of premiums.” In terms of a life insurance policy, the insurance company can “contest” your policy in one of two ways: (1) the insurance company issues the policy and then realizes within the first two years that an answer given on the application was inaccurate. They rescind the policy and refund your premiums; or (2) the insured person passes away during the first two years of the policy and the beneficiary makes a claim which tips the company off that there may be inaccurate answers on the application. If so, they rescind the policy and deny the claim for benefits.
In both scenarios, the insurance company conducts what is called a “contestable investigation” which looks a little bit different depending on the company and the policy value. For a high value policy, the company will likely spend more time, money and effort conducting their investigation. In either case, they will do some variation of the following steps: Request medical records for the insured person to confirm the medical history information provided on the application; Collect recorded statements from the beneficiary, treating physicians, and the agent if one was involved; Have the information reviewed by a medical professional on staff to determine whether any of the information on the application was inaccurate. If they determine any single piece of information on the application was inaccurate, they will deny the claim for benefits and declare the policy void from the inception.
Once the denial letter goes out, most people consider their claim dead in the water and give up. However, it is your right to appeal the denial of your claim for life insurance benefits and fight for the money you deserve. Don’t act too hastily, though, because you may have limited appeals. A poorly written, under researched, bare bones appeal letter will do nothing but waste time. That is why it is best to contact a life insurance attorney as early in the process as possible. A knowledgeable and experienced life insurance attorney can put together a thorough and comprehensive, legally-based appeal letter which will give you the best opportunity to overturn the denied claim.
