Life insurance is a financial tool designed to provide financial security for your loved ones in the event of your passing. However, there are situations where policyholders may face challenges such as rescission or wrongful lapse, putting their coverage at risk. At Kantor & Kantor, we understand the profound impact such situations can have on your emotional and financial life.
Navigating the legal landscape can be difficult, especially when confronted with the intricate nuances of insurance policies and the tactics employed by insurance companies. With our expertise in insurance law and a commitment to client advocacy, we are dedicated to helping individuals and families overcome obstacles and secure the coverage they deserve.
We believe in the power of justice and are here to stand beside you during these challenging times. Contact us at 818-886-2525 for a free consultation and start the journey toward resolving your life insurance policy’s rescission or wrongful lapse case.
We offer a free case evaluation to discuss how our attorneys can assist you. Contact us now at 818-886-2525 for a free consultation.
What Is the Rescission of a Life Insurance Policy?
Rescission refers to the retroactive cancellation of an insurance policy, typically due to misrepresentation or concealment of material facts by the policyholder during the application process. In essence, rescission renders the policy void from its inception, as if it never existed.
Insurance companies have the right to rescind a policy if they can demonstrate that the policyholder made false statements or failed to disclose pertinent information that would have affected the insurer’s decision to underwrite the policy. Materiality is a key consideration in determining the validity of the misrepresentation, as it must be substantial enough to influence the insurer’s assessment of risk.
What Is the Wrongful Lapse of a Life Insurance Policy?
A wrongful lapse occurs when a life insurance policy terminates prematurely due to the failure to pay premiums, often inadvertently or due to administrative errors. In such cases, the policyholder may not be aware of the lapse until it is too late, potentially leaving beneficiaries without the intended protection.
State laws and insurance regulations typically provide safeguards to prevent wrongful lapses and protect policyholders from unintended loss of coverage. These safeguards may include grace periods, notification requirements, and options for reinstatement or conversion to alternative coverage.
How Long Can You Go Without Paying Before a Policy Lapses?
One skipped payment will not instantly inactivate a policy. By law, life insurance companies must provide policyholders a “grace period” after a missed premium, allowing them time to catch up on payments. As per California Insurance Code § 10113.71, life insurers must grant a grace period of at least 60 days from the premium due date before terminating a policy. The policy remains active throughout this period, and the policyholder or other concerned parties can rectify the missed payments to maintain the policy’s validity.
Intentional Policy Lapse & Bad Faith
The implementation of California’s 60-day notice requirement for policy termination was prompted by reports of life insurance companies terminating policies without providing adequate notice to policyholders or beneficiaries. These companies are aware that elderly individuals are more prone to forget premium payments and face a higher mortality risk. For insurers, it proves more lucrative to allow such policies to lapse after collecting a lifetime of premiums and subsequently deny benefits to beneficiaries.
Instances have been observed where insurance companies deliberately allowed policies to lapse by sending a single letter to an aged policyholder in nursing care, despite knowing that the premiums were being paid by others responsible for managing the senior citizen’s financial affairs. Deliberately inducing a policy lapse by concealing notices about missed premiums may be considered as engaging in bad faith insurance conduct. At the very least, this raises concerns about the legitimacy of a claim denial. If your coverage was denied due to a policy lapse, consult with an experienced wrongful lapse of life insurance policy lawyer to determine if you have a rightful claim to benefits.
Tactics Used by Insurance Companies to Rescind Claims
Insurance companies wield significant power when evaluating and processing claims, but sometimes, this authority is abused through unfair tactics. Here are some common unfair tactics employed by insurance companies in their efforts to rescind claims:
1. Material Misrepresentation Allegations
Insurance companies may allege that the policyholder made omissions or material misrepresentations during the application process. Even innocent or unintentional errors can be used as grounds for rescission. These allegations can be subjective and open to interpretation, making it vital for policyholders to scrutinize the insurer’s evidence and challenge any inaccuracies.
2. Nondisclosure Claims
Similar to material misrepresentation, insurers may accuse policyholders of failing to disclose relevant information about their health, lifestyle, or other pertinent factors. Insurers often conduct exhaustive investigations to uncover discrepancies between the application’s information and the policyholder’s actual circumstances. Policyholders should be vigilant in providing accurate information and be prepared to defend against allegations of nondisclosure.
3. Post-Claim Underwriting
Some insurance companies use post-claim underwriting to scrutinize the policyholder’s medical history and other details only after a claim has been filed. If discrepancies are discovered, insurers may attempt to rescind the policy retroactively, citing grounds such as pre-existing conditions or undisclosed risks. This practice undermines the principle of good faith and can leave policyholders without the coverage they thought they had.
4. Selective Policy Enforcement
Insurance companies may selectively enforce policy provisions or impose overly stringent interpretations of contract terms to justify claim denials or rescissions. This tactic allows insurers to exploit ambiguities in policy language to their advantage, often to the detriment of policyholders who rely on the coverage they purchase.
5. Bad Faith Practices
In extreme cases, insurance companies may engage in bad faith practices, knowingly disregarding their contractual obligations and acting with malice or reckless indifference toward policyholders’ rights. These practices can include outright refusal to investigate or pay valid claims, coercive tactics to pressure claimants into accepting inadequate settlements, or unjustified threats of legal action.
We are people helping people and are here to help you with your case. Contact us at 818-886-2525 and take the first step towards securing the insurance benefits you deserve.
What Should I Do if I Am a Beneficiary of a Rescinded Life Insurance Policy?
During the Contestability Period, which spans the initial two years of coverage, if the insured passes away, the life insurance company thoroughly investigates the information provided by the insured in their application and medical questionnaire. Should they uncover any false statements, errors, or omissions, regardless of their significance, the policy will be rescinded, and beneficiaries’ claims for death benefits will be denied.
Many errors and omissions are unintentional. For the policy to be rescinded, the life insurance company must demonstrate that the error or omission was made deliberately to deceive the underwriter and secure lower premiums. We have successfully assisted numerous clients nationwide in obtaining death benefits from rescinded life insurance policies.
A beneficiary’s case becomes even stronger when the alleged misrepresentation is immaterial to the cause of the insured’s death. However, even if it is relevant, we have been able to negotiate settlements with life insurance companies, ensuring our clients receive the death benefit minus the premiums the insured would have paid had the alleged misrepresentation not occurred.
Will an Insurance Company Pay Life Insurance Pay if the Insured Dies During the Grace Period?
If a payment is missed, the policy does not immediately lapse; instead, it enters a grace period lasting one or two months. But what if the insured person passes away during this period? Fortunately, in most cases, policies remain active during the grace period. However, any missed payments must still be settled to receive the payout. Failure to clear the outstanding debt by the end of the grace period could lead to the insurance company denying the claim.
Amid the complexities of a pandemic, many states mandate insurance companies to extend their grace periods due to ongoing health challenges. While this extension may provide more time, it remains crucial to settle all dues promptly. This minimizes the chance of the insurance company trying to withhold funds.
What Should I Do if I Get a Rescission or Wrongful Lapse Notice?
Receiving a notice of rescission or wrongful lapse of your life insurance policy can be a distressing and confusing experience. Taking immediate action to protect your rights and explore available options is crucial. Here is a step-by-step guide on what to do if you find yourself in this situation:
- Review the Notice Thoroughly: Carefully read your insurance company’s rescission or lapse notice. Understand the specific reasons cited for the action, including any alleged misrepresentations or premium payment issues.
- Gather Documentation: Collect all relevant documentation, including your original policy, application materials, and any communication with the insurance company. These documents will be essential in assessing the validity of the notice.
- Contact Your Insurance Company: Contact your insurance company promptly to seek clarification on the reasons behind the rescission or wrongful lapse. Request detailed information and documentation supporting their decision.
- Consult With Legal Counsel: Seek the guidance of an experienced lawyer for rescission or wrongful lapse of life insurance policy. A legal professional can analyze your case, review the notice, and advise you on the best course of action to challenge the rescission or lapse.
- Policy Review: Work with your rescission of life insurance policy attorney to review your life insurance policy. Identify any discrepancies or inaccuracies that may have led to the rescission or wrongful lapse.
- Negotiation With the Insurance Company: Your attorney can negotiate with the insurance company to resolve the dispute amicably. This may involve addressing any misunderstandings, rectifying errors, or negotiating a reinstatement of your policy.
- Appeal the Decision: If negotiations prove unsuccessful, your attorney can assist you in filing an appeal with the insurance company. Presenting a well-documented case and addressing the issues raised in the notice can strengthen your appeal.
- Legal Action: In cases where appeals are denied or the insurance company is unresponsive, your attorney may recommend taking legal action. This involves filing a lawsuit to protect your rights and seek a fair resolution.
Our attorneys at Kantor & Kantor will help you gather all the documentation needed to help you fight your rescission or wrongful Lapse case.
Why Kantor & Kantor Are Your Best Bet
When facing the daunting prospect of a rescission or wrongful lapse of your life insurance policy, choosing the right legal representation is paramount. At Kantor & Kantor, we understand the intricacies of insurance law and have a track record of successfully advocating for our clients in complex insurance disputes. Here is why we are the trusted choice for handling your case:
Specialized Expertise
Our firm specializes in insurance law, with a dedicated team of attorneys with in-depth knowledge and experience handling rescission and wrongful lapse cases. We stay updated on the latest legal developments and strategies to provide our clients with the best possible representation.
Proactive Approach
Time is of the essence in insurance disputes. We proactively approach your case, swiftly identifying issues, gathering evidence, and taking strategic action to protect your rights and interests.
Demonstrated History of Success
Our firm has a long-standing reputation for achieving favorable outcomes in insurance-related disputes. We have successfully represented numerous clients facing rescission or wrongful lapse issues, securing reinstatements and compensation, and ensuring our clients receive the coverage they are entitled to.
Skilled Negotiators and Aggressive Litigators
Our attorneys are skilled in pursuing the most favorable outcomes for our clients through negotiation or litigation. We approach negotiations with a strategic mindset, seeking amicable resolutions whenever possible. However, when litigation becomes necessary, our team is known for its assertiveness in the courtroom, fighting to protect our clients’ rights.
How We Can Help
We understand the distress and uncertainty that can accompany the threat of rescission or wrongful lapse of your life insurance policy. Our attorneys for rescission or wrongful lapse of life insurance policy specialize in navigating the complexities of insurance law. We are committed to providing expert guidance and representation throughout the process.
- Comprehensive Evaluation: Our first step is to evaluate your case. We carefully review the details of your life insurance policy and any relevant documentation to assess the grounds for rescission or wrongful lapse. By understanding the specifics of your situation, we can develop a strategic approach tailored to your unique needs and objectives.
- Asserting Your Rights: As your legal advocates, we steadfastly assert your rights as a policyholder. Whether your policy is facing rescission due to alleged misrepresentation or has wrongfully lapsed for administrative reasons, we leverage our extensive knowledge of insurance law to advocate vigorously on your behalf. We ensure that your interests are represented effectively in negotiations with the insurance company.
- Effective Communication with Insurers: We engage in open and effective communication with insurance companies, presenting compelling arguments and negotiating on your behalf to seek a fair and just resolution. Our goal is to reinstate your coverage or secure a reasonable settlement.
Contact a Lawyer for Rescission or Wrongful Lapse of Life Insurance Policy Today
If you are facing a life insurance policy’s rescission or wrongful lapse, it is crucial to seek legal guidance promptly. At Kantor & Kantor, we are people helping people and are committed to providing effective legal representation to protect your rights and financial well-being.
Contact us at 818-886-2525 to schedule a free consultation and let us help you navigate the complexities of life insurance disputes. Our experienced attorneys are here to guide you through every step of the legal process, ensuring you receive the advocacy and support you deserve.
Attorney Glenn R. Kantor
Glenn Kantor is a founding partner of Kantor & Kantor LLP. As a young attorney, Glenn saw the injustice of wrongful insurance denials and created a law firm to represent individuals seeking to obtain their rightful benefits. Glenn is committed to ensure that clients receive the benefits they are entitled to under their insurance policies or group health plans. [Attorney Bio]
