Wrongful Denial of Life Insurance Claims Investigation

If you lose your life insurance, getting it reinstated usually means costly and complicated procedures, additional tests and new, higher premiums. Individuals who are ill, suffer from a disability, or are in the final stages of life and unable to take care of their own affairs may accidentally miss a payment and lose their life insurance without a fair warning. Luckily, California has special protections in place to help prevent policy lapse due to non-payment.

Since 2013, it is illegal for life insurance companies in California to terminate a policy if they did not first give the customer a meaningful opportunity to designate another person to receive their policy notices. More specifically, insurance companies are required to let customers know at least once a year that they can let another person also receive their insurance correspondence. Life insurance companies are also required to include the necessary designation form with their notice. This allows policyholders to easily access the needed form and arrange for someone else to help them with their affairs. If an insurer fails to comply with these requirements, the benefit under the policy may be recoverable even if the policy had lapsed due to non-payment.

Unfortunately, it appears that some life insurance companies failed to get their internal policies and procedures up to speed with these new rules.  Because of this, the practice of failing to notify policy holders about their ability to designate third parties persists and benefits are unfairly and illegally denied to beneficiaries.

Lawsuits for unfair denial of life insurance benefits in California have already been filed against many life insurance companies. Some providers “buried” their annual third-party designation notice by putting it at the bottom of all annual notices in small, single-spaced font. Others failed to let their customers know about third-party designations altogether, which is illegal under California law. Certain insurance companies also did not send their customers the needed designation forms. As a result, many beneficiaries who make a claim for insurance death benefits may have their claim wrongfully denied. The insurance companies cite lapse due to non-payment, even though they could not lawfully terminate the policy before becoming compliant with these rules. Life insurance companies that have been sued for these practices include::

• New York Life Insurance
• Lincoln Benefit
• John Hancock
• Prudential
• TransAmerica