A New York and New Jersey Lawyer Who Represents Policyholders and Beneficiaries in Life Insurance Denial Cases

Life insurance companies are refusing to pay death benefits for some life insurance policies that were taken out on the lives of elderly people and then sold to investors. The Wall Street Journal today published an article on this topic on the front page of its “Business & Finance” section, profiling how AXA Equitable litigated in New York to keep from paying a $5 million life insurance policy.

In that case, a $12 million estate was listed for the insured, when she actually had assets of less than $100,000. Jurors ruled for investors who bought the policy while the insured was still alive. The insurer had claimed fraud, but as in many cases, it did not adequately underwrite the policy. In other words, it did not properly investigate the application to verify if the facts contained in it were true–in fact, it did not even order a credit report on the insured.

In the life insurance material misrepresentation cases that I handle, it is quite common for life insurance companies to issue policies without carefully examining the application to see if there are inconsistencies or inaccurate answers, or checking on the financial and medical background of the applicant beyond asking a series of questions and accepting the answers at face value.

At issue in the investor cases are billions of dollars of death benefits that elderly people took out in insurance policies on their lives and later sold, often for a fraction of the death benefit. Insurance companies claimed that they are duped by investment schemes, while investors assert that insurers, hungry for premiums, do not thoroughly underwrite policies.

If the policy is in effect for over two years, the incontestability laws in most states dictate that the insurance company has to make payment. In that case, whether there was a misrepresentation in the application is beside the point.

 

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