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

I came across an article that discusses the various reasons for life insurance denials. Written by an insurance agent, it takes a different perspective than I would have as a life insurance attorney for policyholders and beneficiaries, but nevertheless, it contains a useful rundown of the reasons often asserted in support of life insurance denials.

One point the author makes that I disagree with is his assertion that the two-year contestability period that applies to life insurance denials limits the rights of insurers more than parties to other types of contracts: “Contracts in general are contestable for the life of the contract if it can be proven that one party to the contract defrauded the other during the formation of the contract. But life-insurance contracts limit this to two years.” This statement is made by the author in the context of material misrepresentations in the policy application.

To begin with, contracts are not contestable for the life of the contract. If there is a contract with a duration of, say, 50 years, a party cannot sue at the end of it for a breach or misrepresentation that occurred at inception. Life insurance companies should know about the applicant’s true health and financial status before issuing a policy, because they can, and typically do, require applicants to sign releases allowing the insurer to obtain personal information. If the insurer chooses not to investigate, well, it should bear the consequences, as opposed to telling the beneficiary who is depending on the policy for financial support that s/he is out of luck.

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