Missouri Insurance Lawyer Blog

Life insurance is a critical financial tool for many families in the United States. As a recent Missouri case illustrates, the failure of an insured to give true answers on a life insurance application can result in a loss of the insurance policy when it comes time to collect the life insurance. In the case of Adams v. Stonebridge Life Insurance Company, the 8th Circuit Court of Appeals held that where a man who purchased life insurance policy gave false and misleading answers on application in response to questions regarding whether or not he had a pre-existing mental disorders, the company could rescind the policy. The court noted that the insurance company justifiably relied on the man's application answers and therefore the claim for benefits to the beneficiaries after the applicant's death was proper.

This underscores two important points. First, that the application is very important in the process of obtaining life insurance and will be relied upon by the insurance company in determining whether or not to insure a person, and the amount of premium that will be paid if the application is accepted. Second, while subject to certain statutory limitations, an insurance company generally has the right to rescind the policy when the application answers were falsely made by the applicant. Most states, including Missouri have a non-contestability clause, under which after a certain period of time has passed answers will no longer form the basis for rescission. However, as no one ever knows when they will die, it is important practice to only provide correction information when applying for life insurance, so that the benefit will actually be there when it is needed.

For decades life insurance companies have hammered home the necessity of having life insurance to protect your family. This marketing campaign by the insures has become such a common part of the fabric of life in the United States, that it is uncommon that a married couple will not have some form of life insurance on at least the primary wage earner. Many families have life insurance on both spouses and sometimes even there children.

Life insurance is widely sold in the United States and it is unfortunately not always easy to collect. Some large insurance companies will deny claims hoping that the grieving spouse with children will be unable to challenge the insurance company's decision. Life insurance companies know that they can take advantage of people who do not have a lawyer because they do not know the law. Depending upon how the policy is sold, the law may also favor the life insurance company making it even harder for an unrepresented person to collect the benefits under the life insurance policy.

Continue reading "Missouri Life Insurance Claims Denials" »

Insurance is critical to protect your security in good and bad times. Life insurance, liability insurance and disability insurance are key to protecting yourself and your family. This article discusses some of the key points.

Wealth Matters - Never Mind Your 401(k). How's Your Insurance? - NYTimes.com.

Knowing how much life insurance to get is critical to protecting your family. This article from the New York Times provides valuable information.

Your Money - How Much Is Enough in Insuring a Life? - NYTimes.com.

If you are a claimant under a life insurance policy and the insurance company has refused to pay you need a lawyer experienced in fighting insurance claims denials. Chris Faiella, with the law firm of Tatlow, Gump, Faiella & Wheelan, LLC, may be able to help. Contact him at www.tgfwlaw.com or call at 1-800-264-3455.

Buffet buys life insurance company.

Berkshire Hathaway unit acquires part of Swiss Reinsurance Co. - latimes.com.

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.