Disputed Life Insurance Claim results in £1.6m Payout

Posted Jul 31, 2019.


Many insurance companies have gained a bad reputation when it comes to paying out – or not paying out – when a policyholder or a beneficiary tries to make a claim. This applies to all types of policies, and many policy holders may feel powerless and frustrated should an insurer refuse to pay out for what they feel is a valid claim. However,

professional legal help is available to contest such claims on your behalf, and the example below of a contested life insurance claim illustrates the huge difference such help can make to a persons life and financial security.

A life insurance policy is designed to protect beneficiaries, typically a partner, spouse or children,  in the event of the death of the insured. But what happens if the policyholder is incapacitated prior to death and as a result, missed some premium payments for the policy? With most life insurance policies, there is no feature that helps safeguard against this happening, which can often result in a claim being refused if the policy has been deemed lapsed because of non-payment of premiums.

Widow receives payout after challenging insurer

A case from the US highlights the importance of professional legal assistance should a legitimate claim be refused by an insurance company. The case, from 2015, resulted in the widow of the policyholder receiving £1.6m, having previously been told that as policy premiums had been missed whilst her husband lay dying in hospital, the policy had lapsed and therefore no payments would be made. The policyholder, the widow’s husband, had been paying over £3,000 per month in premiums and had paid over £280,000 up to the point he became ill. 

The insurer was notified that the insured was seriously ill. Four months later, a premium notice demand was posted out, which the widow says she never received. A month later, following her husband’s death, the widow noticed the oversight and sent in two payments that were rejected, with the insurer saying the policy was paid in full. A short while later, the insurer then said it was not honoring the death claim, saying that they had sent multiple premium demand notices and would have accepted the late payments if the husband had not passed away.

Following the intervention of an experienced insurance dispute lawyer, after a hard fight the widow eventually received the money that she was entitled to. It was clear during the dispute that just as the  insured must have paid premiums in order to keep the policy ‘live’, the insurer must also follow certain rules as well. In particular, an insurance company must generally notify an insured when a policy is at risk of lapsing due to non-payment. Also, such notices must comply with the policy terms and overall life insurance regulations. Such regulations will often compel insurers to send premium-due notices, as a provision in the insurance contract. Insurance contracts and life insurance laws usually provide for a grace period (typically 30 days), which allows an insured to avoid cancellation of insurance coverage if premiums are paid within this grace period. 

Professional help with Life Insurance Disputes

At Bakers Solicitors, disputed insurance claim cases are dealt with on a no win, no fee basis. There is no upfront or unexpected costs, so if you feel you have been treated unfairly by an insurance company please contact us today for friendly and professional assistance. You can contact us by email, arrange a free consultation online or ring us on FREE on 0800 731 7284.