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life insurance law? and what it means for me.?

Ok this is going to be a bit of a long question so if you don't like long questions then please by all means move on. So ok here i go, my MoM died on 5-07-10 at a hospital here in Las Vegas. She had a term life insurance policy worth $25,000 through AARP underwritten by New York life. She had just gotten it a few months back for me. When she filled out the form it only had 3 health questions #1 in the last 2 years have you been told you had a life threatening illness. #2 have you been in a hospital in the last 2 years. #3 have you had any medical test in the last 3 months. She answered honestly in the no. They never asked any follow up questions at all. Now when she died, unknown to me she died of a bleed in her G.I track with chrrossis of the liver and hepatitis c as an underlying cause. Now my question is if they deny my claim do i have a case to sue? P.S if the poster is right then why would they send me a claim form and ask for her death certificate. Would it not be more simple to just tell me they will not pay unless it was in force for 2 years.

Public Comments

1. Sorry for your loss, and also for the bad news I'm about to give you. Non medically underwritten life policies such as the one you described do not pay out anything unless the policy was in force for two years. It doesn't matter that she told the truth on the application. The only thing they'll pay is a return of the premium. That is the way they work. It will be denied and you don't have a case to sue.
2. I don't know if they will pay or not. I think it is a good sign they might since they mailed you the claim form. No one here would know for sure if they will pay because the devil is in the details that are in the actual policy. You can not sue if they turn you down. The only thing you can do is contact the Department of Insurance in your state for help. It would help to know what state your in. A link is below. Just click on your state for the Department of Insurance. And, sorry for your loss.
3. Because you received a claim form does not mean that you will receive the full death benefit. Your mother applied for what is called a simplified issue life insurance policy. The company does not require a medical exam and only asks a few basic health questions. You see lots of these types of policies advertised on TV. The insurer knows that people applying for this type of coverage are generally uninsurable. So in order for the company to be able to issue a policy they use a waiting period instead of underwriting on the basis of health. The insured person usually has to survive for two years after the policy is issued. If the person survives that period, then their heirs are entitled to the entire face value of the policy. If they don't survive the specified period the beneficiaries, instead, receive a return of premium with perhaps a small percent of interest added. Sorry for your loss. Best wishes.
4. You'd have to read the policy to find out. Most of the time, a "guaranteed issue" no medical exam policy like this, doesn't pay out if the insured doesn't live at least two full years after taking the policy out. And it says that, right in the policy. They're sending you the claim form, because that's the first step towards filing a claim. They can't DENY a claim that hasn't been filed. So, first you file the claim, THEN they can deny it in writing.