Life Insurance – What are Incontestability, Contestability, and Rescission? And how can they affect your claim?
You probably did not know that a life insurance policy that is properly paid for can still be taken away by the life insurance company, and the claim not paid, under laws involving Incontestability, contestability, and rescission, in the State of California. What do these terms mean, in California, involving life insurance policies and claims? Really, these terms and concepts are central to whether the life insurance company will pay on your claim, or not. We can help, NOW.
The most common thing that life insurance companies are doing to avoid payment on life insurance policies where the premium has been paid has to do with contestability and rescission.
Rescission and rescind is the legal term for undoing a legal contract sometime after it has been signed and paid for. The life insurance companies use rescission to undo the life insurance policy – a special legal contract – even after the death of your loved one. If the claim comes within the first two years of the policy, and is contestable, then the life insurance company will investigate will great energy, looking for something to claim as a misrepresentation on the application. To a life insurance company, if someone dies from a disease within two years of buying the policy, there must have been a misrepresentation, something that was not disclosed, because life insurance companies try very hard to not issue life insurance policies to people who might actually use them.
The way the life insurance company looks for “grounds” in its rescission investigation, is to usually get all of the applicant’s medical records, for ten years or more before the application.
The life insurance company is looking very hard through every page of what can be hundreds of pages medical records, searching for something, anything, that the life insurance company can say was misrepresented. We have seen this be as minor as diagnostic test, an x-ray or MRI, that did not reveal anything, to be used by the life insurance company as “grounds” to not pay on the policy, and to rescind the policy.
Under the broad view of the law that the life insurance company likes to argue, it doesn’t even matter if the question of fact was about something that did not contribute to the loss of your loved one. The insurance company is just investigating to try a big “gotcha” memory test, where they ask a person on the application (with the friendly agent saying, oh, it’s okay) to answer a page of odd, broad questions, going back five, or even ten years, about every kind of medical situation – just to test your memory. Then, the life insurance company does the medical test “open book” by using an authorization to obtain copies of every medical provider and hospital you have been to in the last ten years.
They use people to review those records, looking for anything that doesn’t get your loved one a “100%” score on the application questions. If there is anything less than a 100% match between the ten years of records “open book” test that the company uses, and the page of the application done as a memory test for your loved one, the applicant, the life insurance company will rescind the policy, making it disappear, and refusing to pay anything on the life insurance policy.
More than two years after a life insurance policy is issued, it is considered by California law to be incontestable, so the kind of vigorous medical investigation is usually not done by the life insurance company, since it is too late to rescind for misrepresentation.
In California, the important law is in the California Insurance Code, § 10113.5 on contestability, giving the life insurance companies, as they figure it, two years from the issuance of the life insurance policy based on the life insurance application, to assert anything at all that doesn’t match up 100%.
This is California Insurance Code, § 10113.5 on contemptibility:
a) An individual life insurance policy delivered or issued for delivery in this state shall contain a provision that it is incontestable after it has been in force, during the lifetime of the insured, for a period of not more than two years after its date of issue, except for nonpayment of premiums and except for any …California Insurance Code – Insurance § 10113.5
10113.5. (a) An individual life insurance policy delivered or issued for delivery in this state shall contain a provision that it is incontestable after it has been in force, during the lifetime of the insured, for a period of not more than two years after its date of issue, except for nonpayment of premiums and except for any of the supplemental benefits described in Section 10271, to the extent that the contestability of those benefits is otherwise set forth in the policy or contract supplemental thereto. An individual life insurance policy, upon reinstatement, may be contested on account of fraud or misrepresentation of facts material to the reinstatement only for the same period following reinstatement, and with the same conditions and exceptions, as the policy provides with respect to contestability after original issuance.
These are the issues that we regularly fight the life insurance companies on, for decades in Federal Court, United States District Court, to get your life insurance paid NOW.
Contact us at lifeinsurancelawyerNOW.com and lifeinsurancejustice.com to get your claim paid, NOW.