Denial of Life Insurance Claims Made within Two Years of Date of Issue of Policy

Under Florida law, when two years have elapsed from the date of issuance of a life insurance policy, the policy becomes “incontestable.” Florida Statutes Section 627.455 provides: “Incontestability.—Every insurance contract shall provide that the policy shall be incontestable after it has been in force during the lifetime of the insured for a period of 2 years from its date of issue except for nonpayment of premiums and except, at the option of the insurer, as to provisions relative to benefits in event of disability and as to provisions which grant additional insurance specifically against death by accident or accidental means.” Typically, this law is construed to mean that a life insurance company cannot deny a claim based on allegedly false, misleading, or missing information in the policy application after the two year period expires.

However, insureds/owners of life insurance policies do pass away within the two year time frame. When this occurs, a life insurance company will often closely review the policy application and medical records to determine if there were any omissions of material fact or misrepresentations in the application and if so, use them to a basis to deny (i.e., contest) a claim or cancel the policy, treating it as if it never existed and returning the premiums paid. Given that an applicant is required to answer quite a few questions in a life insurance policy application, the life insurance company may be in the position to challenge the accuracy of some of the answers. It is important to remember, however, that the insurance company may only deny the claim if the information is material to the insurance company’s decision to insure the applicant against the risk of death. Disputes often arise over whether the information at issue is material (i.e., important, essential, and relevant). Therefore, if a life insurance company denies your claim because it occurs within the two year “contestability” period, you should closely evaluate whether the information that forms the basis of the denial is truly material.

Please contact Joel Ewusiak for legal assistance if your claim for life insurance death benefits has been denied or delayed due to alleged omissions of material fact or misrepresentations in the policy application.