Missouri recently passed a new law which purports to provide better access and more protection to life insurance purchasers. House Bill 577, which will become law this August makes several changes to the insurance law, but in reality offers little for consumers of life insurance. The only protection is that an insurance company may not deny an applicant for past or future lawful foreign travel unless based upon sound actual or reasonable experience.
The strongest protection from abusive life insurance denials in Missouri continues to be common law actions, and first party actions for Vexatious Refusal. Unfortunately these remedies while successful in obtaining payment lack the punch to stop abusive practices in the first place.
People purchase life insurance policies as a way to help their loved ones after they pass away. A life insurance policy can provide surviving beneficiaries with financial stability after a family member dies. In the process of selling the policy, Life insurance companies consider a variety of factors including medical history, height and weight, whether you use tobacco or drink and if your job presents particular occupational hazards. These factors are used to determine insurability and premium (price) on the life insurance policy for a particular person.
People believe that if life insurance is obtained and the premiums paid, that upon death, collecting the life insurance will be easy. Unfortunately, that is not always what happens.
Life insurance companies review each claim carefully before paying the benefits. Insurance companies will want the certified death certificate, and a claim form as part of the claims process. One of the most common reasons for denial is that there was a "material misrepresentation" on the life insurance application. Of course the applicant is now dead, so any proof they could offer is gone. The insurance company may claim that the misrepresentation occurred in the original application for insurance or in a later amendment to the application. In almost every such case the insurance company will obtain medical records of the deceased and may have the application, records and other facts reviewed by medical specialists.
In such situations the beneficiaries will find that instead of financial security they have a fight on their hands with an insurance company that is motivated to keep its dollars. While a family can sue for breach of contract, this only recovers the benefits and not expenses and attorneys fees. Missouri's Vexatious Refusal Statutes Section 375.296 and 375.420 provide for attorneys fees, but have laughable penalties that provide no financial incentive for Missouri insurance companies to not try their luck at the denial game. Missouri needs true first party bad faith so that insurance companies that unfairly and purposefully deny claims can be held accountable for their actions. Only when poor treatment of Missouri insurance policyholders is more expensive than fair treatment will abusive practices stop.
The strongest protection from abusive life insurance denials in Missouri continues to be common law actions, and first party actions for Vexatious Refusal. Unfortunately these remedies while successful in obtaining payment lack the punch to stop abusive practices in the first place.
People purchase life insurance policies as a way to help their loved ones after they pass away. A life insurance policy can provide surviving beneficiaries with financial stability after a family member dies. In the process of selling the policy, Life insurance companies consider a variety of factors including medical history, height and weight, whether you use tobacco or drink and if your job presents particular occupational hazards. These factors are used to determine insurability and premium (price) on the life insurance policy for a particular person.
People believe that if life insurance is obtained and the premiums paid, that upon death, collecting the life insurance will be easy. Unfortunately, that is not always what happens.
Life insurance companies review each claim carefully before paying the benefits. Insurance companies will want the certified death certificate, and a claim form as part of the claims process. One of the most common reasons for denial is that there was a "material misrepresentation" on the life insurance application. Of course the applicant is now dead, so any proof they could offer is gone. The insurance company may claim that the misrepresentation occurred in the original application for insurance or in a later amendment to the application. In almost every such case the insurance company will obtain medical records of the deceased and may have the application, records and other facts reviewed by medical specialists.
In such situations the beneficiaries will find that instead of financial security they have a fight on their hands with an insurance company that is motivated to keep its dollars. While a family can sue for breach of contract, this only recovers the benefits and not expenses and attorneys fees. Missouri's Vexatious Refusal Statutes Section 375.296 and 375.420 provide for attorneys fees, but have laughable penalties that provide no financial incentive for Missouri insurance companies to not try their luck at the denial game. Missouri needs true first party bad faith so that insurance companies that unfairly and purposefully deny claims can be held accountable for their actions. Only when poor treatment of Missouri insurance policyholders is more expensive than fair treatment will abusive practices stop.
