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Life Insurance and Contestable Period?

My mom took out a $25,000 life insurance policy through AARP, underwritten by New York Life insurance in August of 2009. She found out in April of this year that she had Stage 4 Pancreatic cancer, and she passed away in May. I sent in the claim form, as well as the certified death certificate and medical provider information to the insurance company. Because she passed away before reaching two years on the policy, does that mean I will not receive the full amount of the policy? She was only 50 years old, and had no medical problems before this.

Public Comments

1. As long as she did not lie on the application and had no knowledge of the cancer at the time of the application you will be paid. The contestability period is 2 years. But as along as she did not lie or hide any information on the application you will still be paid. And, do not get upset with the insurance company for investigating. As you know many people do lie and try to get away with it. Not that your mother did that, but some people do and that is why insurance companies do investigate to make sure everything was honest. However, because it is within the 2 years the company may take a little longer than usual to pay because they may want to make sure that she didn't lie or hide anything. When everything checks out ok. you will get paid. If you need help, contact the Department of Insurance in your state. Sorry for your loss.
2. It depends on the policy. It has nothing to do with the contestable period insomuch as whether or not the policy was done with little or no underwriting. If it's a "normal" policy then you should have no issues, but some of those "no questions asked" policies do not pay the full benefit for the first two or three years. Also, if it's a "normal" policy, you may expect them to get medical records before paying the claim to see if they are within their right to contest it.
3. I agree that the company will certainly drag its feet given the time frame. If it was a guaranteed issue policy through AARP, then the benefit level will definitely be reduced. If it was a standard policy, they will go line by line throughout the application and try to get out of paying. You should speak with the adjuster handling the claim and see if there is any way in which you can assist. It isn't in their best interest to rush these precedings; helping in any way you can would reduce the delay. I am very sorry for your loss.