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How Standard Insurance Company Denies Life insurance Claims

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Standard Insurance Company, a.k.a. Standard Life Insurance Company (The Standard) is a national insurance company with disability, dental, and life insurance policies covering more than 8 million Americans. They have billions in assets and thousands of employees. Part of how they maintain such profitability? Stingily denying life insurance claims and other insurance payouts, whether justified or not. Below, our seasoned Los Angeles insurance denial attorneys discuss the justifications relied upon by The Standard in denying life insurance claims.

Common Reasons for Denial

The Standard may deny life insurance claims for a number of reasons. Just because they assert these justifications, however, does not make them valid reasons for denial. Some of the most common reasons The Standard uses to deny a life insurance claim include:

  • Uncovered Cause of Death. Many policies have exclusions for certain causes of death. For example, a policy might exclude death that occurs during the commission of a crime. Some policies exclude suicide as a cause of death if the death occurs within a certain number of years (typically, two years) after the policy goes into effect. Closely review your life insurance policy during the application process to ensure you know which causes of death are excluded.
  • Policy Lapse. Life insurance coverage lasts only as long as the policy is in effect. The Standard and other insurers will let a policy lapse the second they can if the insured party is sick or of advanced age. Policies can lapse if the premiums are not paid. Typically, however, there is a 30- or 31-day grace period to make up the payment without losing coverage or owing penalties. Additionally, the insurer must inform the policyholder about any missed payments and the risk of policy lapse; if they fail to do so, in writing, then they cannot simply let the policy lapse and then refuse coverage.
  • Material Misstatements in the Application. As we discuss below, The Standard may claim that the policy must be rescinded because the initial application included material misstatements.

Policy Rescission and the Two-Year Contestability Period

One of the favorite tricks of The Standard and other life insurance companies is known as policy rescission. Rescinding a policy is not the same as denying a claim, although for the intended beneficiaries, it’s just about as bad. When a policy is rescinded, the insurance company is declaring that the policy is invalid and always has been invalid because of some problem with the application. The insurer will cancel the policy and refund any premiums paid. Rescission can happen even after a triggering event has occurred (i.e., after the insured party has died).

An insurer can only rescind a policy if they identify a “material misstatement” in the application, meaning a false statement or glaring omission about something important. Lying about a pre-existing medical condition, for example, would be a material misstatement; a clerical mistake in the policyholder’s address would not be material.

Insurers like The Standard will try to claim any error in the application is material and merits rescission. Just because they say an error is material, however, does not make it so; beneficiaries have the right to push back. Moreover, in California a policy can only be rescinded within the “contestability period,” which is two years from the date the policy began. If the insured party dies after two years, then the policy must pay out, regardless of whether there were material misstatements in the original life insurance application.

Call Today Help With a Denied California Life Insurance Claim

If your life insurance claim has been unreasonably denied, or if you are dealing with other bad faith insurance issues in California, fight for the coverage you are owed with the help of the zealous and thorough Los Angeles insurance claim denial lawyers at Gianelli & Morris for a free consultation at 213-489-1600.

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