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LOUISIANA LIFE INSURANCE LAWYER GUIDE: WHERE’S THE POLICY?  WHERE’S THE PAYMENT?

Life insurance agrees to pay a certain amount of money to a beneficiary in exchange for payment of a premium upon the death of the insured.  However, life insurance companies only make money if they pay out less in life insurance benefits than they take in premiums.  Life insurance companies hold onto other people’s money by not informing beneficiaries that policies exist and by denying claims made by known beneficiaries.

What happens when an insured person dies but beneficiary never comes forward because he or she doesn’t know the policy exists?

Usually Nothing!  The insurance company holds onto the money and continues to use the beneficiary’s money to the insurance company’s own benefit until the policy is discovered and the claim made.

Insurance Companies have actual knowledge in their files that people they insure have died, yet they neglect to initiate an investigation and pay the claim.  The beneficiary never comes forward because he or she doesn’t know the policy exists.   There is no Louisiana penalty to discourage this dishonest practice.  Unfortunately, Louisiana has failed to pass an Unclaimed Life Insurance Benefits Law that would require life insurers to search the Social Security Administration death master file and provide payment of benefits to beneficiaries.  What can be done in the meantime while waiting for the Louisiana Legislature to act?

• When you purchase a policy, inform your named beneficiary;
• If you think you may be a beneficiary, search for the life insurance policy online;
• Contact your Louisiana Legislators to let them know you want an Unclaimed Life Insurance Benefits Law in Louisiana for consumer protection.

Even when the insured dies and the beneficiary knows of the policy and makes a claim, the beneficiary may encounter other problems where the life insurance company denies payment.
The four primary areas where beneficiaries encounter denials 1) death during the contestability period; 2) type of death not covered under the policy; 3) failure of insured to disclose relevant personal information; and 4) failure to timely pay policy premiums;

• Contestability period– the two year period of time  from the purchase of the policy that the life insurance company may contest the validity of the contract for alleged misrepresentations in the application relating to age, occupation, health, specific diseases and conditions and insurance history. The insurer might try to refuse payment even if the cause of death has nothing to do with the misrepresentation. Suicide is sometimes also included in the two year contestability period. If the insured lives beyond the contestability period and then dies, usually benefits are paid; If benefits are denied or delayed, a Louisiana life insurance lawyer may be helpful in challenging any alleged misrepresentation;
• Type of death not covered in the policy– the policy may contain specific types of deaths that are not covered. For example, some policies attempt to exclude deaths relating to military service; some life insurance policies try to exclude death by suicide. A life insurance lawyer may be helpful in challenging these exclusions.
• Failure to disclosed relevant personal information– the life insurer may allege that in the application process, the insured did not disclosed information (e.g. a health condition) to adequately measure the risk of insuring him; the false statement may prevent recovery only of the insurance company can prove the insured made the statement with the intent to deceive and/or it materially affects the risk. A life insurance lawyer may be helpful in challenging this defense by showing the defense was waived, that adequate disclosure was made, the application question was vague or truthful information was verbally given to the agent but the life insurance agent wrote untruthful information in the application;
• Failure to timely pay premiums– the life insurer may claim the insurance policy lapsed for non-payment. Sometimes, a whole life policy with a cash value may provide the insurer to borrow form the policy to pay the overdue premium. A Louisiana life insurance lawyer be helpful here to prove the insurance premium was timely paid.

What is the difference between a whole life and term policy?

Term policy exists for the period of a specified period of time provided premiums are paid. A whole life policy is more of a permanent policy that exists for the life of the person insured as long as premiums are paid. Whole life is typically is more expensive than term insurance and has a cash value.

Social Security “Life Insurance”
In addition to the typical life insurance claim. Certain relatives of the deceased may want to contact Social Security to see if they qualify for Social Security Death Benefits.

• Social Security Death Benefits – A surviving spouse or child may receive a special lump-sum death payment of $255 if they meet certain requirements.
• Social Security Survivors Benefits- may be available to a widow, widower, children of a certain age and sometimes, even an ex-spouse.

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