What Happens When Someone Dies With a Pending Life Insurance Application?
Life insurance is an invaluable legal and financial tool for many families. Life insurance guarantees that your family will receive financial assistance in the event you should pass away. Life insurance companies, however, are in the business of collecting premiums, not paying out benefits; if there are grounds to deny coverage for your claim, they’ll find it. What happens if you or your loved one were in the middle of applying for life insurance and then passed away unexpectedly? If the application was still pending when the policyholder dies, do their beneficiaries still collect?
Read on for a discussion of what happens if someone dies while a life insurance application is still pending. For help collecting the life insurance benefit you are owed, or for help holding insurance companies accountable for wrongful denials and other bad faith actions, call a zealous California life insurance denial attorney at Gianelli & Morris.
If the First Premium Has Been Paid, There’s Coverage
Although an unusual situation, it’s not unheard of: A person fills out and submits an application for life insurance and, while awaiting final approval, they pass away. Insurance companies will, of course, try to say that the application was not yet approved and finalized, and therefore the beneficiaries are not entitled to coverage. That’s not always the case, however.
Long-standing California case law establishes that an applicant is entitled to “temporary insurance protection” once an “insurance company receives and accepts an insurance premium with a policy application.” If the applicant has submitted their application to the insurance company and they have paid an advance premium, the insurance company is bound to cover that applicant unless and until they reject the payment and the application. The insurer must reject the application, refund the premium, and provide notice to the applicant to officially cease coverage at that point; if the applicant dies before being properly rejected, then the company must pay out benefits.
California’s Insurance Code also provides that an insurance company is on the hook once the application is signed and submitted, the insurance company provides a receipt for or actually receives the first payment, and the application is subsequently approved, even if the insured dies before the policy is technically issued and delivered.
Insurance companies can issue a “conditional receipt” of the first premium and coverage, limiting coverage to a certain lesser amount while the application is still pending and before official issuance of the policy, but that language must be clear in the documents.
On the other hand, if the application is still pending and the applicant has not paid a premium or otherwise been guaranteed coverage, it’s not clear whether the insurance company would owe benefits.
Call a Knowledgeable California Life Insurance Denial Law Firm Today for Help Protecting Your Policy and Your Loved Ones
If your life, disability, or health insurance claim was unreasonably denied, or if you have otherwise been subjected to bad faith insurance conduct, fight for the coverage you are owed with the help of the veteran, successful Los Angeles insurance denial lawyers at Gianelli & Morris. Call for a free consultation at 213-489-1600.