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Losing someone during life insurance contestability period

A life insurance policy is something you hope you never have to use. However, it is comforting to know it is there if the unthinkable happens and your loved one is gone from your life. If you are left with medical bills, funeral costs and regular monthly bills and expenses to pay, you may wonder how you will manage, especially if your loved one contributed to the household income.

A life insurance policy can fill that gap, providing much needed relief at a difficult time. You likely felt deep gratitude for your loved one's foresight in purchasing such a policy. However, if your loved one died during the policy's contestability period and the insurance company denies your claim following an investigation of fraud, you may be upset and confused.

What is a contestability period?

Life insurance companies need to protect their bottom line, so they include stipulations in their policies that prevent consumers from benefiting from insurance based on fraud. One of those protections is the contestability period. This is a period of time, typically two years, following the purchase of a policy. If the policyholder died during that time, the insurance company reserves the right to delay or deny payment on a claim while it investigates.

Essentially, the insurance company is looking for evidence that the policyholder misrepresented information on the policy in order to gain coverage that the company may have otherwise denied. Policyholders may also commit fraud to get lower rates on policies than they would if the company knew the truth about their health or lifestyles. If your loved one died during the contestability period, the insurance company will take one of the following actions:

  • Determine there was no fraud and pay your claim including interest for the delay
  • Determine there was fraud on the application and pay your claim after deducting the amount of additional premiums your loved one should have paid for the policy
  • Determine that your loved one purchased the policy through fraud, deny the claim and refund you the amount of premiums your loved one paid on the policy

When you learn that your life insurance claim is under investigation, you would benefit from seeking the advice of a Minnesota attorney regarding your best options for moving forward. Whether your loved one died within the contestability period or at some later time, accusations of fraud can cost you the benefits you need to carry on at this troubling time.

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