Understanding Material Misrepresentation in Life Insurance Claims

When it comes to life insurance policies, it’s crucial to understand the concept of “material misrepresentation” and how it can impact the payout of a claim.

Material misrepresentation refers to the act of providing inaccurate or incomplete information on an insurance application, which could affect the insurance company’s decision to issue the policy or the terms of the coverage. This could include misrepresenting age, health status, occupation, or any other relevant information that the insurance company uses to assess the risk and determine the policy’s premiums.

But not all inaccuracies or omissions on an insurance application are a material misrepresentation. The information must be significant enough to have influenced the insurance company’s decision to issue the policy or the terms of the coverage. For example, failing to disclose a minor health condition that would not have affected the policy’s issuance or premiums may not be considered a material misrepresentation.

If an insurance company discovers that an insured person has made a material misrepresentation on their life insurance application, it can have serious consequences. The insurance company may have the right to:

1. Deny the life insurance claim: If the misrepresentation is discovered after the policyholder’s death, the insurance company may be able to deny the death benefit payout to the beneficiaries.
2. Rescind the policy: The insurance company may choose to cancel the policy entirely, effectively voiding the coverage and any premiums paid.
3. Adjust the policy terms: In some cases, the insurance company may choose to adjust the policy terms, such as increasing the premiums or reducing the coverage, to account for the misrepresented information.

Of course, the insurance company’s ability to take these actions is subject to state laws and the specific language of the policy. Some states, like Texas, have stricter requirements for the insurance company to prove that the misrepresentation was material and intentional.

The best way to avoid issues with material misrepresentation is to be completely honest and accurate when completing your life insurance application. Here are some tips to help you protect yourself:

1. Read the application carefully: Ensure that you understand all the questions and provide complete and accurate information.
2. Disclose all relevant information: Don’t assume that certain information is irrelevant or unimportant. Err on the side of disclosing too much rather than too little.
3. Review the application before submitting: Carefully review your application to catch any mistakes or omissions before signing and submitting it.
4. Keep records: Keep copies of your application and any supporting documentation in case you need to reference them later.

If you or a loved one have been denied a life insurance claim due to alleged material misrepresentation, contact us. We can review the details of your case, help you understand your rights, and work to ensure that you receive the full benefits you are entitled to. Don’t hesitate to contact us for a consultation.

Raval Trial Law is a Houston-based litigation law firm offering sophisticated representation to a range of clients in insurance litigation matters. Our belief is that in order for advocacy to be truly effective, there must be a “bite” waiting behind the “bark.” We prepare thoroughly for the prospect of trial when needed. Raval Trial Law is presently primarily focused on life insurance and long-term disability insurance.