Folks who want to protect and provide for their loved ones in life regularly purchase life insurance policies to do just that. During the process of obtaining life insurance, these folks looking to obtain that peace of mind place a great deal of trust in the life insurance agent handling the application for insurance. However, certainly, life insurance agents make mistakes.
Sometimes the life insurance companies do a poor job of training their life insurance agents, and sometimes life insurance agents simply make careless mistakes. And sometimes, life insurance agents even do things they know to be wrong or inappropriate or “look the other way” because typically, life insurance agents are paid out of commission of a successfully placed life insurance policy. In fact, most life insurance agents are paid more for procuring higher amounts of life insurance, are paid little or nothing if a potential policyholder does not receive a life insurance policy. Thus, life insurance agents are incentivized to obtain life insurance for a potential policyholder, even if it means that the policyholder’s beneficiary would not actually be able to receive the life insurance benefits.
Life insurance companies often support the likelihood of this despicable outcome where a policyholder would pay premiums but not get benefits if he or she were to pass, by making the application process tricky for the potential policyholder with a lot of “fine print.” Plus, the life insurance companies will not look into, and not let their life insurance agents look into, the medical backgrounds of the potential policyholders. But eventually, the life insurance companies expect the beneficiaries to pay the consequences by receiving nothing in their time of need. This should not be the case, either legally or ethically.
What Are Some Common Mistakes Insurance Agents Make?
Life insurance agents regularly make many different types of errors and mistakes, likely because, in part, life insurance companies do a poor job of training their life insurance agents. Life insurance agents often do not read the application to the applicant word-for-word and instead paraphrase, which is inappropriate. Life insurance agents are required to ask all the questions word-for-word and completely fill out an application.
Life insurance agents also often purposely leave out information that they feel is not important, or relevant, or needs to be included in the application. This also is highly inappropriate, especially when the life insurance company will later deny life insurance benefits because that information was left out. For example, one life insurance agent left out child-birth and all related care, which again is highly inappropriate, especially since the life insurance company later wrongly denied life insurance benefits because that information was left out.
Life insurance agents regularly know that there are inconsistencies within life insurance applications but do not follow-up on or resolve these inconsistencies. Such inconsistencies can also occur in the medical examiner’s report, which life insurance agents are required to review in conjunction with the life insurance application. Like the life insurance companies, life insurance agents have a duty to verify through reasonable investigation if there have been any errors, mistakes, or misrepresentations; neither can simply look the other way.
Life insurance agents also make minor mistakes, but these mistakes can end up in a life insurance claim denial. Checking the wrong box is not a minor mistake if it is a mistake that a life insurance company uses to try to deny hundreds of thousands of dollars in life insurance benefits to a deserving beneficiary.
What Happens When a Life Insurance Agent Makes a Mistake?
So, when a life insurance agent makes a mistake, does the policyholder or the beneficiary pay the price? The short answer is a resounding “no.” Despite the efforts of the life insurance companies, the life insurance companies are “on the hook” for the mistakes of their life insurance agents. They cannot deny a valid life insurance claim for something that was the fault of an agent.
Additionally, life insurance agents are required to carry “Errors and Omissions” insurance policies of their own, which means there is yet another insurance company that should be guaranteeing that the beneficiary will get paid. One very useful tactic in litigation can be to turn both those insurance companies against themselves, letting them fight out who is going to pay the beneficiary; often, they are willing to split the difference.
At any rate, Louisiana life insurance law is very clear that “the acts of a life insurance agent can be imputed to the life insurance company itself.” This means that if the life insurance agent becomes aware of any information, then it is assumed that the life insurance company also is aware of that information. And, if the life insurance agent takes any action, then it is assumed that the life insurance company also has taken that action. The knowledge of the insurance agent or his mistake may become that of the insurer, and the life insurance company is bound by the acts and knowledge of its life insurance agent in completing a life insurance application.
If the life insurance agent by mistake, fraud, or negligence inserts erroneous or untrue answers to questions contained in a life insurance application, those representations are not binding upon the applicant/policyholder or the beneficiary. Additionally, a life insurance applicant may rely upon and sign an application as completed by an insurance agent and may rely upon a life insurance agent’s expertise in interpreting the nature of the information sought by the insurance company he represents. Inaccuracies in transcribing information provided to the agent by the insured cannot be used by the life insurance company to deny the insured’s claim.
Lastly, false answers as to the condition of the insured’s health in an application for a life insurance policy are not “misrepresentations” amounting to fraud available to the life insurance company as a defense if the life insurance agent had knowledge of the insured’s condition at the time of the application.
How to Handle a Life Insurance Claim Denial Based on the Mistake of a Life Insurance Agent
Unfortunately, once a beneficiary receives a denial letter from the life insurance company and discovers that the denial is due to the mistakes of the insurance agent, the only choice the beneficiary has is to retain an experienced life insurance attorney. The attorney will need to file a lawsuit because this will be the only way to involve the insurance agent and the agent’s Errors and Omissions insurance company. Almost certainly, the life insurance company will not accept the error or mistake of the life insurance agent, and it will not pay the beneficiary the full policy benefits and then sue the agent’s Errors and Omissions insurance company for reimbursement, which is exactly what should happen.
Nonetheless, once an experienced life insurance attorney is retained, a denied beneficiary should be able to recover the full life insurance benefits if, in fact, the denial is due to the mistakes of the life insurance agent. Again, as stated above, a life insurance company (as well as an agent’s errors and Omission insurer) is “on the hook” for the mistakes of its life insurance agents and cannot deny a valid life insurance claim for something that was the fault of its life insurance agent.
Let New Orleans Legal Recover Your Life Insurance Proceeds
At New Orleans Legal, we understand the immense financial and emotional destruction that a denied life insurance claim can cause. It is heartbreaking for a grieving family to receive a denial letter after their loved one has paid premiums for the peace of mind to know that this family would be taken care of. If your life insurance claim has been denied, please call attorney Peter Diiorio at New Orleans Legal, LLC, to start to process of making things right by getting you your life insurance proceeds.
Mr. Diiorio of New Orleans Legal, LLC is an experienced Louisiana life insurance claim attorney representing insureds and beneficiaries in life insurance claim disputes against life insurance companies. Mr. Diiorio is happy to handle your case on a contingent fee basis, which means that all legal fees are taken at the end only if there is a recovery of life insurance proceeds for you. Please contact us now at (504) 897-5580 to schedule a free face-to-face, Zoom, or telephone consultation, and let us handle the life insurance company for you.
