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Life insurance is a really useful product for people when it’s done ethically. If you pass away, you want to leave money for your loved ones whether it be for funeral expenses or to support them in their daily acts of living.
Unfortunately, not all life insurance companies act honestly in processing these claims. They lose money every time that they pay out a claim, so if they think they can deny a payout, they will. They’ll even do it when they know they can’t get away with it if you sue them over it. In their minds, they have nothing to lose, because if you sue they’ll just have to pay out what they owed anyway. As a result, often these lawsuits get filed and settled very quickly.
One common reason for a denial is when coverage has lapsed or the insured person missed a payment. If you are hit by a car or dealing with a severe illness and in the hospital, it makes sense that you won’t be paying your bills in a timely manner. A lot of life insurance policies have clauses written in them that say something like, “the policy will be terminated if it is not paid within 31 days of the due date.” So you can spend thousands of dollars over many years and then lose everything.
The good news is that Illinois law is looking out for this type of situation. Section 234(1) of the Illinois Insurance Code says: a life insurance company can declare a policy has lapsed only if a premium payment is at least six months overdue or the company notified the insured party beforehand that “the policy and all payments thereon will become forfeited and void” if a premium is not paid on time.
This scenario actually happened in a recent Illinois court case. A man had paid over $23,000 in premiums toward a $250,000 policy. He got sick with a very serious form of cancer and eventually passed away from it. He missed payments and although the insurance company sent a payment termination notice. He died four days after the grace period ended. The Judge in the case ruled that the termination notice provided didn’t specifically state what would happen if a payment wasn’t made on time. In the ends the kids won and collected their money.
We’ve seen similar denials on cases where someone missed a payment and then caught up with their payments. The life insurance company accepted the check and then had the nerve to later say the policy was terminated because payments were late. It’s really gross behavior. While you shouldn’t miss a payment if you can help it and you should catch up if you do, there are laws that address how these situations should be handled.
The bottom line is that we’ve had great success with these cases and it costs nothing to bring a case unless we are successful. If you would like to discuss a life insurance benefits lawsuit for free, call us any time.