Floridians purchase life insurance policies to provide security for their loved one’s. We purchase these policies with the expectation that the claim will be paid promptly. The unfortunate reality is that many life insurance claims are delayed, denied, or contested for a variety of reasons. When faced with a contested life insurance claim, it is advisable to seek a free consultation with an experienced attorney.
Common Types of Life Insurance Disputes
1. Misrepresentation in the Life Insurance Policy Application
Florida law permits insurance companies to void or cancel a policy when there is a misrepresentation in the application or to the life insurance company. Florida Statute 627.455 limits the time an insurance company can void a policy to two-years after the policy has been in force.
When the insured passes away within the two-year period, the insurance company often conducts a detailed review of the person’s application and medical history. This investigation can often be dragged out for an extended period of time while the insurance company repeatedly asks for additional information. Florida, like most states, permit the insurance company to void the policy if there was any material misrepresentation. The fact that the misrepresentation had nothing to do with the cause of death is irrelevant.
When addressing a denial for an alleged misrepresentation, there are a number of specific questions than need to be answered to determine if the insurance company’s position is legitimate:
- What were the specific questions asked by the insurance company in the application? Surprisingly, applications sometimes do not specifically request information about a certain medical condition, or, sometimes, will use vague and unclear wording in requesting information.
- Who asked the application questions and were all of the application questions asked? Many insurance agents will complete the application over the telephone and fail to ask the questions as they actually exist in the policy. This makes it impossible to determine if the insured failed to disclose information.
- What did the insured and agent discuss? Sometimes the application process involves a series of discussions with an agent. Agents do not always accurately relay the information they receive from an applicant to the insurance company.
- Was the insured aware of an undisclosed medical condition? Insurance companies will sometimes cancel or void coverage when a minor condition was not disclosed in the application. The applicant may not have been aware of the condition, especially if it was minor or not life threatening. Lack of awareness can be raised as a defense to cancellation.
2. Change of Beneficiary Disputes
Florida courts presume that the named beneficiary is entitled to payment of the policy’s death benefit. There are a number of situations in which a beneficiary designation can be contested,
- Capacity: A person needs to have the mental ability or “capacity” to designate a beneficiary. Florida courts have explained that the mental capacity to designate a beneficiary is the same as the capacity to enter into a contract. A lack of capacity challenge normally resonates when the insured has dementia, Alzheimer’s, or other mental deficit.
- Undue Influence: This is similar to a lack of capacity challenge, but it involves another person taking advantage of a person’s mental incapacity to become the policy’s beneficiary.
- Compliance with Policy’s Change of Beneficiary Requirements: Most life insurance policies include specifications for changing the policy’s beneficiary. Often times, the policy will require the beneficiary to be changed through written forms or documents required by the insurance company. Surprisingly, insureds sometimes attempt to change the beneficiary but fail to comply with the insurance company’s requirements to effect the change. Beneficiaries are entitled to enforce the policy’s requirements including strict compliance with the beneficiary change provisions.
- Forgery: We have personally handled cases in which a beneficiary change was forged.
- Agreement to Designate Beneficiary or Maintain Insurance: It is not uncommon for people to enter into an agreement to make or keep someone as a life insurance beneficiary. The most common example is a property separation agreement in connection with a divorce. One spouse may be required to maintain life insurance in an ex-spouse’s favor.
3. Divorced Spouse Revocation
It is fair to say that most people would prefer for their ex-spouse not remain a life insurance beneficiary following divorce. However, until 2012, Florida enforced life insurance beneficiary designations in favor of an ex-spouse. Florida Statute 732.703 was passed. This law automatically voids life insurance beneficiary designations to ex-spouses when the divorce decree is entered by a judge.
There are certain exceptions to this law. The most important is that a divorcing couple can agree in writing to keep someone listed as a beneficiary on non-probate assets. Also, post-divorce designations of an ex-spouse are valid and enforceable.
We are often asked if there are ways around Florida’s spousal revocation law. There are a number of exceptions to this law. However, the specific facts of your case must be known to offer an opinion about your situation.
4. Cancellation for Failure to Pay Premiums
It should come as no surprise that a life insurance company can cancel a policy for non-payment. We have had some cases in which the policy was cancelled even though payment had been made. This is particularly common when a person purchases multiple policies through an agent on behalf of multiple family members. If your policy has been wrongfully cancelled, or a claim has been rejected due to non-payment of a premium, you should seek the advice of an experienced life insurance attorney.
5. Self-Inflicted Injuries
Florida is a state the permits a life insurance company to exclude coverage in the event of suicide. Many other states due not permit an insurance company to avoid coverage through a suicide exclusion.
Insurance companies will sometimes wrongfully claim that a person died through suicide. A person’s cause of death is sometimes unclear. Even where there is agreement as to the medical cause of death, it is unclear if the death was natural, accidental, or self-inflicted. Coverage exclusions contained in life insurance policies are generally disfavored and only enforced when there is clear supporting evidence. An insurance company that denies a claim without clear supporting evidence may be in bad faith and obligated to pay penalties and attorney’s fees.
What is an Interpleader Lawsuit?
An Interpleader is a type of legal action that occurs when multiple people claim to be entitled to the same property. In the life insurance context, an interpleader lawsuit is filed when multiple make a claim to the same payout. In an interpleader lawsuit, the life insurance company is the plaintiff that initiates the lawsuit. The defendants to the lawsuit are the people claiming the payout. The life insurance company’s goal in filing an interpleader is to deposit the payout with the court and allow the court decide who is entitled to the money.
Insurance companies will often initiate an interpleader action after the claimants have been unable to agree to a division of the death benefit. In many cases, the life insurance company may believe one of the claimants has the superior claim to the money. However, life insurance companies are contractually obligated to pay the correct beneficiary. Because insurance companies are normally risk adverse, they normally file an interpleader and seek leave of court to deposit the funds with the court’s registry. This way, the life insurance company has tendered the money for payment, but has left it up to the court to decide who gets paid.
For a person who has made a claim, the interpleader process can be intimidating. You have been named as a defendant in a legal action and, as such, you have strict deadlines to file a response asserting why you are entitled to the death benefit. Once you have made your claim in court, you will have deadlines for completing discovery, issuing subpoenas, taking depositions, filing motions, and preparing for trial. Many interpleader claims can ultimately be resolved through a motion seeking a judicial declaration. However, your best chance at success is having an experienced life insurance attorney represent you.
Can Life Insurance Proceeds Go Through Probate?
Life insurance is a class of assets often referred to as payable on death or POD. These types of assets normally do not go through the probate process. Instead, the beneficiary designated by the policy owner is paid through a standard claim process.
However, many insureds do not designate a person as a beneficiary. In this situation, the estate of the policy owner is entitled to receive the benefit. The money is then distributed to the estate’s legal heirs through the probate process. A last will and testament may determine who will receive the life insurance payout. However, where there is no will, the heirs of the person who died will receive the money.
Important Legal Protections and Deadlines for Florida Life Insurance Claims
1. Florida’s Two-Year Contestability Period
Most states, including Florida, have what is called a two-year contestability period. This means that the life insurance company only has two-years from the date the policy was issued to deny coverage due to a misrepresentation by the insured in applying for insurance coverage. From our experience, most representations are made innocently without the intent to deceive the insurance company. Nonetheless, insurance companies reserve the right to deny coverage and to cancel the policy when a misrepresentation is discovered.
A person may pay premiums on a life insurance policy for many years. The two-year contestability period acknowledges the unfairness that would result from an insurance company that denied a claim long after the policy was issued. The contestability period requires the insurance company to investigate the insured’s medical background and make diligent efforts to confirm the accuracy of the information that it used to set the premium.
2. Back Out Period
A Florida resident has 10 days to change his or her mind after purchasing a life insurance policy.
3. Time to Make a Claim
There is no specific time period in which a person must make a claim against a life insurance policy. However, if you are not the named beneficiary, and you believe you have a superior claim, you should promptly make a claim. Failure to make a prompt claim could result you waiving your claim.
4. Grace Period for Late Payment of Premium
Florida law provides that a life insurance policy cannot be canceled due to a reasonably late payment. In Florida, a policyholder is given a 30 day grace period to pay a premium. A life insurance company cannot cancel the policy or deny coverage until after the conclusion of the 30 day grace period.
5. Time to Pay a Life Insurance Claim
In Florida, there is no specific time frame for when a life insurance claim must be made. Florida Statute 627.4615 states that a life insurance company must pay the entire policy benefit plus interest. A life insurance company is required to pay interest normally from the date it receives a death certificate.
6. Attorney’s Fees for Delayed or Denied Life Insurance Claims
Florida Statute 627.428 provides a mechanism to recover attorney’s fees and costs when a life insurance claim has been underpaid, denied, or delayed. Fee can normally be recovered after a lawsuit has been filed seeking payment of the life insurance proceeds that are owed. However, the law requires the claimant to refrain from filing a lawsuit at least 60-days after submitting proof of claim to the life insurance company. If the claimant is successful in recovering the money owed, then he or she can recover the attorney’s fees and costs incurred in seeking damage.
7. Florida’s Bad Faith Insurance Law
In Florida, a life insurance company has an obligation to investigate and pay claims in a prompt manner. Life insurance companies owe a duty to pay claims in a prompt manner and to work diligently to reach a coverage decision. Florida’s Unfair Trade Practices Act also prohibits insurance companies from engaging in certain deceptive trade practices including:
- Making misrepresentations to induce the claimant into accepting an unfavorable settlement.
- Refusing to investigate claims in a timely manner.
- Denying claims without conducting a sufficient investigation.
- Failing to communicate.
- Failing to request additional information in a timely manner.
- Failing to provide a written explanation as to why a claim has been denied.
Insurance companies that have acted in “bad faith,” may be sued for actual damages, punitive damages, attorney’s fees, and costs. However, before a bad faith suit has been filed, two things need to happen. First, the insured or claimant must submit a civil remedy notice to the Florida Department of Financial Services that provides a detailed explanation of why the insurance company has acted in bad faith. For a life insurance claim, may include the following:
- The life insurance company has unjustifiably delayed payment because it has not promptly investigated the claim and made a claim decision.
- The life insurance company has refused to pay the policy benefit to you even though you are the rightful beneficiary.
- The life insurance company has wrongfully denied the claim due to a misrepresentation in the policy application or for an alleged misrepresentation.
- The life insurance company wrongfully claims that premiums were not paid.
- The life insurance company misapplies the two-year contestability period or claims that an exception to the contestability period.
Bad faith claims are often complicated. If you claim has been denied or delayed, the assistance of an experienced life insurance attorney could pay significant dividends.
No Attorney Fee Unless We Recovery Money for You?
For many people faced with a denied, delayed, or disputed life insurance claim, hiring an attorney by the hour is out of the question. Legal fees for contested litigated matters are often astronomical with no guarantee of a positive outcome. MyInsuranceCase typically represents people with life insurance disputes on a contingency basis in which our recovery is tied to the money recovered on your behalf.
Where Does MyInsuranceCase Handle Cases?
MyInsuranceCase is a group of attorneys that handle life insurance cases throughout Florida and across the nation. We offer free attorney consultations and are available to meet over the phone, by videoconference, or in person. Please contact us today at (866) 977-0977 to discuuss your case with us.
