Will Your Life Insurance Company Pay?

Will Your Life Insurance Company Pay?

You did the responsible thing and bought life insurance for your family. One would think that the life insurance company will do the right thing and pay when the claim is made. Not necessarily:

In the case of Heath Ledger, the trustee for his estate was forced to file an action against the insurance company for failing to pay on a $10M insurance policy purchased by Ledger. The life insurance company had been delaying payment while it investigated the possibility that Ledger committed suicide or failed to disclose certain information about his mental health when he originally applied for the policy. The action has since been settled out of court.

Most people lack the experience and foresight to know that they should document their communication or conversations with insurance agents and claims adjusters. This can create a situation where the insurer may claim that they were not advised of medical conditions that would affect the policy risk.

Keep Detailed Documentation For Life Insurance

If you are buying insurance, be sure to detail all of your medical conditions in your application if it requires it. You should also document all correspondence, email and telephone conversations with the agent and any other person who is related to the insurance company who talks to you when you are about to purchase a policy.  Detail all of the medications that you are taking or have taken in relation to your medical condition and disclose it to the agent and in the application. In the absence of a detailed record of all the information provided to the insurance company, there is a great deal of room for denial of the insurance claim.

Most trustees, executors and beneficiaries should expect that if death occurs in the first two (2) years of the policy, that the policy will be investigated for misrepresentation by the insured. If you are the insured, a beneficiary, or a trustee or executor, make a policy file and keep all records in the file, including a copy of your beneficiary designation.

In order to avoid a situation where the policy lapses for non-payment of the premium, you should set up automatic payments from your account so that the policy is in force at all times. Even if an insurance company is prepared to reinstate a lapsed policy, it will very likely have an impact on how they handle an eventual claim and whether or not there will be investigation and the potential denial of payment.

By Kirk Sloane B.A.(Hon), LL.B.

Lawyer, Share Lawyers

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