An Uphill Battle: Drug Use and Life Insurance Claims
Given the insanity that has been 2020 and the beginning of 2021, it should come as no surprise that an increasing number of people are overdosing and losing their lives at an earlier age. Believe it or not, drug use has huge implications on the payout of life insurance and accidental death and dismemberment insurance benefits which can leave a beneficiary in a very difficult position.
First and foremost, let’s address the elephant in the room…if your loved one passed away as a result of drug use (either prescription or illicit), you are no less entitled to the life insurance benefits owed to you as the beneficiary of a life insurance or accidental death policy. Many of my past clients have felt that their claims were a lost cause because the insured person overdosed either intentionally or unintentionally. That is absolutely untrue, although you will likely be up for a more contentious battle for benefits. Get a life insurance lawyer.
As some of you might imagine, drug use can intersect with life insurance at a few different points. First, during the application and underwriting process. Many insurance companies include questions on their application for insurance regarding prior illicit drug use, as well as prescription drug use and abuse. Due to legal implications related to drug abuse, an applicant is very unlikely to report illegal drug use or abuse. As a result, if the insured person passes away within the first two years of the policy effective date, a claim for death benefits can and will be denied for material misrepresentation following a contestable claim investigation.
With regards to accidental death and dismemberment insurance, a claim for benefits will undoubtedly be denied if the death certificate of the insured lists one of the following as a cause of death: multiple drug toxicity, drug use, prescription drug use, substance use, substance abuse, drug poisoning, overdose, or substance use disorder. The reason these types of claims are almost always denied is because AD&D policies define “accidental death” in a very narrow way to exclude any deaths that can be construed to be caused by a voluntary act on behalf of the insured. Additionally, almost every AD&D policy contains a list of exclusions from coverage including deaths as a result of voluntary ingestion of prescription or illicit drugs.
Denials of life insurance and accidental death and dismemberment insurance claims as a result of drug use or misrepresentations related to drug use do not automatically disqualify a beneficiary from receiving the benefits under the policy. Unfortunately, the process will almost certainly take longer and require an attorney, but the claims are not a lost cause. I would encourage any beneficiary who has been denied for one of the above reasons, to contact a life insurance law firm for a case evaluation. There is nothing to lose.
