Legal Lens: Understanding what’s in your life insurance policy can help you avoid a contested claim later

Legal Lens

The Brown & Crouppen Legal Lens takes a closer look at everyday legal issues and gives you a better understanding of topics that may affect you.

ST. LOUIS – Do you know the details of your life insurance policy? If not, attorney Andrea McNairy with Brown & Crouppen says you should.

“Life insurance policies are just contracts in their form. You need to look in the fine print to see what you are actually purchasing,” she said. “And to see what’s actually included in that policy.”

When you look at fine print, what should you be looking for to make sure your getting what you paid for?

“What companies do is set up exclusions. That’s what the fine print is,” McNairy said.

“Common ones we see are material misrepresentation, meaning that you weren’t honest in your questions. So if a claim is made later, they can go back and disclose, the most common example is smoking. Other exclusions we see are illegal activity, alcohol and drugs, dangerous activity like skydiving.”

McNairy advises people to look for a contestability inclusion in their policy.

“Usually by state, a period of time in which an insurance company can go back and try to deny the claim,” she said.

Is there fine print that people seem to overlook?

“I would say most often it’s the material misrepresentation or contestability period,” McNairy said. “For example, you can die from a sickness but you did not disclose that you had high blood pressure, a company can go back even if your condition wasn’t related to your cause of death and say, ‘We will cancel claim because you did not disclose it.’”

Just how often are insurance companies going back and contesting claims?

“It’s a common occurrence. These insurance companies are designed to make profits and they do that by minimizing their risks and what they will pay on,” McNairy said. “So, if a claim can be denied or not paid out because they can find something in that contestability period that somebody wasn’t honest about that will keep them from paying a claim, they will.”

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