Material Misrepresentations Common Reason for Benefits Denial

Insurance companies make money by collecting more premiums from their policyholders than the companies pay out in claims. Clearly, insurance companies benefit greatly by delaying payment to policyholders or denying payments altogether. Even though insurance companies are regulated, consumers must often retain legal counsel to enforce their contract rights under a policy issued by an insurance company.

Life insurance is a contract between the policyholder and the insurance company that guarantees the payment of a stated amount on money on the death of the insured. Life insurance is offered in various forms including, but not limited to, term insurance, industrial life insurance, whole life insurance, and annuities.

A term you will often hear regarding life insurance is "material misrepresentation." This is a significant misstatement (or material omission) in an insurance application form. When evaluating a life insurance claim by the beneficiaries of a life insurance policy, an insurance company may argue that if it had the application for insurance had been complete and fully accurate, the company would not have issued the life insurance policy in the first place.

Many states give the insurance companies the right to look back (in New York, the look back period is two years) to determine if there was a material misrepresentation or omission in the application. Even if the misrepresentation had nothing to do with the policyholder’s death, an insurance company may deny the claim if it determines that it would not have issued the policy had it known about the misrepresentation or omission at the time.

Insurance companies claim that applicants make material misrepresentations and omissions most often in reference to the following information on the application: age, income, whether or not the applicant uses tobacco, alcohol use/history, hobbies, and health history.

If you or a loved one has been denied life insurance benefits due to an accusation of material misrepresentation in New York or New Jersey or with an insurance company based in one of those states, please contact the Life Insurance Claims Denial Law Firm Trief & Olk.