When Can You Sue a Life Insurance Company?

For many families, life insurance benefits are a critical financial safety net. When a life insurance claim is denied, delayed, or mishandled, it can cause serious financial and emotional stress. In some cases, the only way to resolve the issue may be to sue the life insurance company. But how do you know when a lawsuit is appropriate, and what steps should you take to protect your rights? This guide explores common scenarios that can lead to legal action, what beneficiaries can do, and how an experienced life insurance attorney can help.

Reasons to Sue a Life Insurance Company

1. Bad Faith Denials
   If a life insurance company denies your claim without a valid reason or fails to properly investigate the claim, you may have grounds for a bad faith lawsuit.
   • What qualifies as bad faith?
     • Denying a valid claim without adequate justification.
     • Failing to respond to a claim in a timely manner.
     • Misinterpreting policy language to avoid payment.
     • Withholding information or refusing to provide a clear explanation for the denial.
   • What you can do:
     • Document all correspondence with the insurer.
     • Request a detailed explanation of the denial.
     • Gather evidence to demonstrate that the claim is valid and should be paid.
2. Unreasonable Delays
   Life insurance companies are generally required to process claims promptly once they receive all necessary documents. If an insurer drags its feet, it may cause unnecessary financial hardship for the beneficiaries.
   • Signs of unreasonable delay:
     • Repeated requests for documents you’ve already submitted.
     • A lack of response from the claims department.
     • Delaying tactics without clear reasons.
   • What you can do:
     • Keep a record of when documents were sent and received.
     • Follow up regularly and request written updates on the status of your claim.
     • If delays persist, consider consulting a life insurance attorney who can help push the process forward.
3. Misrepresentation of Policy Terms
   Some insurers may misrepresent the terms of the policy or rely on vague language to deny a claim. For example, they might claim an exclusion applies when it does not, or they might cite a lapse in coverage without proof.
   • What you can do:
     • Obtain a complete copy of the policy, including all riders and amendments.
     • Compare the policy language to the denial letter.
     • If you suspect misrepresentation, seek legal advice to determine if the denial was improper.
4. Interpleader Lawsuits Filed by the Insurer
   In cases where multiple parties claim the same life insurance proceeds, the insurer may file an interpleader lawsuit, depositing the funds with the court and asking a judge to decide who gets the money. If you believe the insurer did not handle the case fairly or has acted in bad faith during this process, you may have a legal claim.
   • What you can do:
     • Gather all documentation showing you are the rightful beneficiary.
     • Provide evidence of the policyholder’s intent, such as beneficiary forms or correspondence.
     • Consider hiring an attorney to represent your interests in the interpleader case.
5. Failure to Pay Full Benefits
   Sometimes insurers pay out less than what you’re owed. This can happen if they calculate benefits incorrectly or misapply policy terms. If the insurance company refuses to correct these errors, you may need to take legal action.
   • What you can do:
     • Review the payout calculation in detail.
     • Request a breakdown of how the insurer arrived at their figure.
     • If discrepancies remain, consult an attorney who can help you seek the full amount.

Steps to Take Before Filing a Life Insurance Lawsuit

• Contact the Insurance Company:
  Before filing a lawsuit, it’s often helpful to formally request a reconsideration of the claim. This gives the insurer an opportunity to correct any mistakes or provide a more detailed explanation.
• Gather Evidence:
  Make sure you have copies of the policy, denial letters, correspondence, medical records, payment receipts, and any other relevant documents. Strong evidence is crucial in proving your case.
• Consult an Experienced Life Insurance Attorney:
  A knowledgeable attorney can help you understand your rights, evaluate the insurer’s actions, and determine whether legal action is warranted. They can also handle the legal process on your behalf, increasing your chances of a favorable outcome.

Holding Insurers Accountable

While many life insurance claims are resolved without issue, some require legal action to ensure that beneficiaries receive what they’re entitled to. If you believe your claim was unfairly denied, delayed, or mishandled, a lawsuit may be the best way to protect your rights and secure the benefits you need.

For guidance on suing a life insurance company, contact the Law Offices of Jason Turchin. We can help you understand your options and take the appropriate next steps. Call us today at 800-337-7755 or chat with us live to learn more.