Some beneficiaries find their loved one’s life insurance policy cancelled after death. While postmortem life insurance cancellation is not very common, it usually happens with young policies. Some states allow a company to cancel a policy within two years of issuing it. So, a policyholder who dies within two years can face postmortem cancellation. If you’re a beneficiary, here’s what you can do.
Is Postmortem Cancellation Legitimate?
Generally, a postmortem life insurance policy cancellation is illegitimate. However, if the policyholder recently purchased their policy and then died within two years, the life insurance company may review the policy. Then, an investigator may look into whether a policyholder did any of the following:
- Lied about their financial situation
- Engaged in material misrepresentation
- Hid an existing medical condition
- Has unpaid premiums
- Committed suicide
They may also investigate to see if the beneficiary engaged in foul play which led to the death of the policyholder.
If they can prove that any of the above issues exists, a postmortem policy cancellation may prove legitimate in court. However, many courts ruled that postmortem insurance policy cancellations are patently unfair. They’re especially unfair if there was enough time to discover the deficiencies before the policyholder died.
What Happens After A Cancellation?
A beneficiary who receives a life insurance claim denial and policy cancellation may also receive the return of the policyholder’s premiums. This happens most often in cases where the policy payout amount is significantly larger than the premiums. Beneficiaries who want to fight a claim denial and policy cancellation should NOT cash a check sent by the insurance company. Cashing a check for the return of premium payments means that the beneficiary agrees they have no right fight their claim denial.
Beneficiaries should gather their loved one’s medical records along with the contact information of medical professionals who can testify on their deceased relative’s behalf. With the help of an experienced life insurance attorney, beneficiaries can fight life insurance claim denials and postmortem policy cancellations.
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Our life insurance lawyers get justice for people who face a life insurance claim denial. Knowing that the objective of life insurance companies is to deny claims, we can utilize our knowledge and legal tools to fight and efficiently win your case. We aim to win the largest payout. If you are experiencing a life insurance claim denial, contact us today.
