If you believe you are entitled to life insurance benefits, and the insurance company has denied your claim, you have the right to challenge their decision in court and sue the insurance company for the wrongful denial of benefits. Consult with an experienced attorney who specializes in life insurance law to assess your case. 

In this blog post, our attorneys will explain the process of suing a life insurance company and what happens if you win or lose.

Can You Sue Your Life Insurance Company for Not Paying Your Claim?

Yes. If you believe you are entitled to life insurance benefits, and the insurance company has refused to pay your claim, you have the right to challenge their decision in court.

When Can You File a Suit Against the Life Insurance Company?

You can sue a life insurance company if you believe you are entitled to receive death benefits from a life insurance policy, but the insurance company has refused to pay the claim.

Life insurance companies often act in bad faith and refuse to pay valid claims. 

You can sue an insurance company if:

1. The insurance company has refused to pay a claim where liability is reasonably clear. 
2. The insurance company failed to approve or deny a claim within a reasonable or specified timeframe. Many people received monthly letters from the insurance company informing them that their claim is being reviewed for more than a year. If your claim is unreasonably delayed, you may have a valid basis to sue an insurance company. 
3. The insurance company denied a claim with little or no explanation as to the reason for the denial. Many beneficiaries receive a generic letter stating that the claim is not payable without any explanation. Many denial letters say that the claim is denied “under the law” without giving any reference to the law or how it affects the claim. 

The insurance company denied a claim based on material misrepresentations on the application after the contestability period has passed.

Reasons for Life Insurance Claim Denials

There are several reasons why a life insurance claim may be denied. Here are some of the most common reasons:

1. Policy Lapse: If the policyholder failed to pay their premiums on time, the policy may have lapsed, and the insurance company may deny the claim.
2. Misrepresentations: If the policyholder made false statements or failed to disclose important information on the application, the insurance company may deny the claim.
3. Suicide clause: If the policyholder died by suicide, the policy may have a suicide clause that excludes payment of benefits.
4. Contestability Period: If the policyholder died within the contestability period (typically the first two years of the policy), the insurance company may investigate the claim and deny payment if they discover any misrepresentations or omissions on the application.
5. Exclusions: The ADD policy may have exclusions that exclude payment of benefits for specific causes of death, such as death due to sickness or drug use.
6. Beneficiary dispute: If there is a dispute over who the beneficiary should be, the insurance company may hold off on paying out the claim until the dispute is resolved.

Read more about the reasons for life insurance claims denials or delays.

Types of Suits You Can File Against Life Insurance Companies

There are several types of suits you can file against life insurance companies. Here are some of the most common:

1. Breach of Contract: If the insurance company has breached the terms of the policy by failing to pay benefits, you can file a breach of contract suit.
2. Bad Faith: If the insurance company has acted in bad faith by denying your claim without proper justification, delaying payment unreasonably, or making false promises, you can file a bad faith suit.
3. Unfair Trade Practices: If the insurance company has engaged in unfair trade practices, such as misrepresenting the policy terms, failing to disclose important information, or engaging in deceptive marketing practices, you can file an unfair trade practices suit.
4. ERISA lawsuit: If a life insurance claim is governed by ERISA, a beneficiary can file a lawsuit alleging ERISA violations. 

How to Sue a Life Insurance Company?

If you believe you are entitled to life insurance proceeds and have been denied payment, you may need to sue the insurance company to collect the benefits. Here are the general steps to sue a life insurance company: 

1. Gather Documents: Collect all documents related to the life insurance policy, including the policy itself, any correspondence with the insurance company, and any documents related to the claim.
2. Consult with an Attorney: It’s recommended to consult with an attorney who specializes in insurance law to assess your case’s strength and determine your legal options.
3. Demand Letter: Your attorney may send a demand letter to the insurance company or other involved party requesting payment of the life insurance proceeds.
4. File a Lawsuit: If the demand letter does not result in payment of the life insurance proceeds, you will need to file a lawsuit against the insurance company or other involved party in the appropriate court. Your attorney will prepare the necessary legal documents and pleadings.
5. Discovery Process: After filing the lawsuit, the discovery process will begin. This is the process where both sides exchange information and evidence to support their case. This may include depositions, interrogatories, and document requests.
6. Negotiations: During the discovery process, there may be negotiations and settlement discussions between the parties involved. If a settlement is reached, the lawsuit can be dismissed.
7. Trial: If the parties cannot reach a settlement, the case will go to trial. Both sides will present evidence and arguments, and a judge or jury will decide the case’s outcome.
8. Judgment: If the judge or jury rules in your favor, the insurance company or other involved party will be ordered to pay the death benefits to the beneficiary or beneficiaries named in the policy.

Suing for life insurance proceeds can be a complicated and lengthy process. It’s always recommended to consult with an experienced life insurance attorney who can help guide you through the process and protect your legal rights.

What Happens if You Win the Lawsuit?

If you win a life insurance lawsuit, the insurance company will be required to pay the death benefits to the beneficiary or beneficiaries named in the policy. The specific amount of the death benefits will depend on the terms of the policy.

The insurance company or other involved party will generally have a certain amount of time, usually within 30 days, to comply with the court’s order to pay the death benefits. If they fail to comply, the court may order additional penalties or sanctions against them.

Once the death benefits have been paid, the lawsuit will be resolved, and the case will be closed. The beneficiaries will be responsible for any taxes, fees, etc.

What if You Lose?

If you lose a life insurance suit, you will not receive the death benefits from the insurance company or other involved party. The court’s decision is final, and you will not be able to appeal the ruling unless there are legal grounds to do so.

If you lose the case, you may be responsible for paying the legal fees and costs associated with the lawsuit. Additionally, you may also be responsible for the legal fees and costs incurred by the insurance company or other involved parties.

How Long Do You Have to Sue a Life Insurance Company?

The type of lawsuit and the state laws play a role in determining how long you have to sue an insurance company. In addition, the policy specifies when a lawsuit can be brought. A statute of limitations is a time limit set by state law that specifies how long you have to file a lawsuit against an insurance company for a denied or unpaid life insurance claim. If you fail to file a lawsuit within the statute of limitations, you may lose your right to pursue the claim.

The statute of limitations for life insurance claims varies by state and can range from one year to several years after the date of the policyholder’s death. The length of the statute of limitations may also depend on the specific circumstances of the case, such as whether the policy has lapsed or there are issues with the beneficiary designation.

It’s important to note that the statute of limitations for filing a lawsuit related to a life insurance claim is separate from the time limit for filing a claim with the insurance company. Most life insurance policies require the beneficiary to file a claim within a certain timeframe after the policyholder’s death, usually within 30 to 60 days.

Contact a Lawyer if You Want to Sue the Life Insurance Company to Get the Benefits

If you are considering filing a lawsuit against an insurance company for a denied or unpaid life insurance claim, it is recommended to consult with an experienced attorney who specializes in life insurance law to determine the applicable statute of limitations and the type of lawsuit to file. Litigating against a large insurer may seem intimidating. We recommend hiring an experienced attorney who will fight for your right to the life insurance benefit. Call us now at (888) 510-2212.