LIFE INSURANCE RESCISSION W
Life Insurance Rescission is when a Life Insurance company cancels or revokes your policies prior to or after you have begun paying premiums. Life Insurance Rescission results in a policy that is no longer viable and will also make it difficult if not impossible to obtain life insurance in the future. This legal move is generally done when insurance companies discover the policy holder has been concealing or excluding relevant information regarding lifestyle or health conditions that would have affected premiums or eligibility (e.g. concealing the use of tobacco products).
Insurance companies most commonly rescind a policy due to concealment, misinterpretation or willful lying regarding pertinent information that may directly affect your mortality or the outcome of the underwriting procedure. This personal health and lifestyle information is referred to as ‘material’ and is considered vital when an insurance company decides whether or not they will accept your policy application and at what premium.
Two of the main ways to avoid the risk of life insurance rescission are to make sure you fully understand the difference between warranty and representation and also to know your timeline. A warranty is considered information you guarantee to be true. A representation is information that you state on your life insurance application and will affect how the contract is formed. In either case if an insurance company finds you have lied or withheld information on your application it can legally revoke your application for life insurance or cancel your life insurance contract. As far as the timeline goes there is a two-year contestability period from when the contract was signed with the life insurance company. If during this two year period the life insurance company suspects fraud or false information was supplied for the underwriting process it can rescind the policy.
Having a life insurance company rescind your policy can seriously affect your ability to insure yourself in the future which in turn affects your family or loved ones after you are gone. Life insurance rescission almost guarantees that you will not be able to get another policy even when looking at different life insurance carriers. This is due in part to the fact that life insurance companies have access to the MIB (Medical Information Board) which records policy rescissions based on health.
Therefore the best way to avoid any risk of rescission is to disclose any and all relevant ‘material’ on your application. If you a health condition or lifestyle habit affects your mortality in any way it is crucial you disclose this information to your insurer. It is always better to have a life insurance policy denied based on this information than having one rescinded.
Tags: Denial Of Life Insurance, Denial Of Long Term Disability Claim
Denial Of Life Insurance Denial Of Long Term Disability Claim
