When you purchase life insurance, you trust that the policy will provide financial protection for your loved ones in the event of your death. However, life insurance companies sometimes engage in bad faith practices, denying rightful claims or delaying payment at a time when families need financial support the most.
At Collins & Collins, P.C., we are committed to holding life insurance companies accountable when they refuse to honor their promises. Bad faith denials of life insurance claims can create unnecessary hardship for grieving families, compounding the emotional toll of losing a loved one. Our firm fights to ensure that insurers meet their obligations and pay beneficiaries the benefits they are entitled to under the policy.
What Is Life Insurance Bad Faith?
Life insurance bad faith occurs when an insurance company unfairly denies, delays, or underpays a legitimate life insurance claim. When this happens, families who rely on life insurance payouts are left to struggle financially, often without the resources they expected. Common examples of life insurance bad faith include:
- Unjustified Denial of Claims: The insurer denies a valid claim without a legitimate reason, forcing beneficiaries to fight for benefits that should have been paid automatically.
- Delays in Payout: Life insurance companies may delay payments for months or even years, putting families in a financial bind as they wait for the benefits they need to cover funeral expenses, debts, and daily living costs.
- Wrongful Claim of Policy Lapses: Insurers sometimes argue that the policyholder let their policy lapse, even when premiums were paid on time, or misrepresent the terms of the policy to avoid paying a claim.
- Disputes Over Policy Terms: Insurance companies may interpret ambiguous policy language in their favor to deny benefits. This could include disputing whether the cause of death is covered, whether a beneficiary is eligible, or questioning the insured’s statements made on the application.
The Impact of Life Insurance Bad Faith
The financial stability that life insurance is supposed to provide is often crucial for families who have lost a loved one. Life insurance is intended to cover funeral expenses, pay off debts, provide ongoing income for dependents, and help beneficiaries maintain their standard of living. When an insurer refuses to pay or delays a claim, it can leave families in financial distress, often at the worst possible time.
- Funeral Costs: Funerals can cost thousands of dollars, and families may be forced to go into debt or struggle to cover these costs if the life insurance payout is delayed or denied.
- Ongoing Financial Obligations: For many families, life insurance is intended to replace the income of a deceased loved one. When benefits are wrongfully withheld, families may struggle to pay mortgages, education expenses, or medical bills.
- Emotional and Mental Strain: Losing a loved one is already an incredibly difficult experience. Adding financial stress and the frustration of fighting an insurance company only worsens the emotional toll on grieving families.
Common Life Insurance Bad Faith Practices
Life insurance companies may use a variety of bad faith tactics to avoid paying benefits. Some of the most common include:
- Contestability Period Denials: Insurers may deny claims if the policyholder dies within the “contestability period” (usually the first two years of the policy), alleging that the insured misrepresented information on their application. Even minor or irrelevant discrepancies may be used as a basis for denying the claim, regardless of the actual cause of death.
- Claiming Suicide: Some insurers attempt to deny benefits by asserting that the policyholder died by suicide, which is typically excluded from coverage under most policies. Insurers may use questionable evidence or flawed reasoning to support this claim.
- Policy Lapse Disputes: Insurers may argue that the policy lapsed due to missed premium payments, even when payments were made or the insured had the right to reinstate the policy. These disputes often arise when an insurer fails to provide proper notice of nonpayment or policy termination.
- Beneficiary Challenges: Insurers sometimes challenge the validity of a designated beneficiary, claiming that the policyholder did not have the legal right to name that person or that changes to the beneficiary were not properly documented.
Why Life Insurance Bad Faith Is Especially Harmful
When an insurance company engages in bad faith regarding life insurance claims, the damage can be devastating. Families rely on life insurance benefits not just for immediate expenses but for long-term financial security. Denying or delaying these benefits can have serious, long-lasting effects, such as:
- Loss of the Family Home: Without life insurance benefits, many families may fall behind on mortgage payments and lose their home.
- Disrupted Education Plans: Many parents take out life insurance policies to ensure their children’s education is secure. When these funds are denied, a child’s future may be jeopardized.
- Debt Burdens: Without life insurance payouts, the family may be left to deal with overwhelming debts, including medical bills, credit cards, or business loans.
At Collins & Collins, P.C., we understand the profound impact these bad faith practices have on families, and we are dedicated to ensuring that life insurance companies cannot escape their obligations.
How Collins & Collins, P.C. Fights Life Insurance Bad Faith
Our firm has extensive experience taking on life insurance companies that act in bad faith. When you work with Collins & Collins, P.C., you can expect us to:
- Investigate the Claim: We will thoroughly examine the details of your claim, including the policy, the circumstances surrounding the denial, and any medical or financial records involved. We will work to uncover the truth and demonstrate that your claim should be paid.
- Challenge the Insurer’s Actions: Whether the insurer is claiming a policy lapse, disputing a beneficiary, or alleging misrepresentation, we have the legal expertise to challenge these assertions and prove that the company is acting in bad faith.
- Maximize Compensation: We fight to ensure that our clients receive the full value of the life insurance policy, including interest on delayed payments, and, where applicable, any additional compensation allowed for emotional distress or financial hardship caused by the insurer’s bad faith actions.
Why Choose Collins & Collins, P.C.?
At Collins & Collins, P.C., we are in the business of holding institutions accountable—and life insurance companies are no exception. We know how devastating a denied life insurance claim can be for families, and we are passionate about making sure that these powerful companies cannot exploit their policyholders in times of grief. When life insurance companies act in bad faith, they violate not only their contractual obligations but also the trust that families placed in them during one of the most difficult times in their lives.
Our team is experienced in navigating complex life insurance disputes and has successfully taken on insurers that refuse to pay out rightful claims. We are especially motivated when large corporations attempt to escape responsibility at the expense of vulnerable families.
Contact Collins & Collins, P.C. for Help with Your Life Insurance Bad Faith Claim
If you are facing a wrongful denial or delay of a life insurance claim, Collins & Collins, P.C. is here to help. We will review your case, explain your legal options, and take the necessary steps to ensure that your family receives the benefits owed to you.
Contact us today for a free consultation. We will fight to ensure that the insurance company pays what is rightfully yours, so you can focus on rebuilding your life after the loss of a loved one.