As a NY estate lawyer who litigates estate cases, the answer is yes. Generally speaking life insurance may be a good investment tool for people who are both attempting to plan their estates and provide for their family should they die unexpectedly. The good part about the life insurance policy as an estate tool is you can simply name a beneficiary to the policy, and circumvent the estate process. In other words, the life insurance policy is treated as a payable on death account and is simply paid over to the beneficiary upon issuance of the insured’s death certificate.

This is advantageous because the beneficiary receives the proceeds instantaneously opposed to having to wait for an executor to be appointed in a probate proceeding.

As such, life insurance is usually a good idea, particularly for young professionals with families who would take a huge financial hit if they died unexpectedly. However, there are certain things about life insurance you should know beforehand:

1. Most life insurance companies issue policies with a whole lot of fine print. All too often that fine print is not in the best interests of the insured’s or their beneficiaries but framed to help the insurer get out of paying life insurance benefits when the time comes. For instance most life insurance policies contain an investigatory period. This means that if you pass away during this investigatory period, usually between 12-24 months from the date of issuance, the insurance company retains the right to “investigate” the terms of the policy and facts surrounding the insured’s death.

This is an insurance company’s nice way of saying, although we took your premiums and assumed the risk of writing your policy, you died too soon. Depending on what the insurer uncovers during this investigatory period they may or may not decide to pay out the proceeds.

2. Be very careful about what you state in your life insurance application. Most life insurance customers do not have the benefit of a NY estate lawyer when they purchase their insurance policy. Normally, lawyers only get involved after someone has passed away. However it is not a bad idea to consult with a NY estate lawyer when shopping for a life insurance carrier as some companies are more reputable than others.

One way insurers like to try to wiggle out of their obligations is by stating the insured, you, made material misrepresentations of fact when applying for a policy.

Our firm just finished litigating such a case. Any NY estate lawyer will tell you that the death of a loved one is stressful enough without adding insult to injury.

As a NY estate lawyer I hear a lot of tragedies but this one struck me as particularly egregious. They were a middle-aged couple who were engaged to be married and had the foresight to take out life insurance policies naming each other as their beneficiary. Despite filling out all the requisite paperwork, submitting to the insurance company’s numerous medical examinations and paying their premiums, it struck me as unfair when the insurance company refused to pay out the proceeds to the beneficiary after the death of one of the insureds.

After inquiring into the nature of the insurer’s denial, I was told that the decedent had made material misrepresentations of fact on his life insurance application. In other words the insurer was claiming that the insured failed to state a vascular condition in his application. Upon litigating the facts of the case I learned the insurer was relying on a single check up where the insured exhibited an elevated blood pressure reading.

After two years of litigation this insurance carrier eventually had no choice but to honor the terms of their insurance policy and pay out the entire amount plus interest.

3. If the Insurance Company attempts to return your premiums and breach your policy do not let them.

Initially, when my client came to me she was searching for a NY estate lawyer. But what she actually needed was a NY estate litigator who was not afraid to sue an insurance company for the non-payment of her fiancé’s life insurance benefit. After writing a single letter to the insurance company in the hopes of resolving this amicably I knew there was no way this company was going to honor their contract.

As a NY estate lawyer who does a lot of litigation and trial work, I immediately filed suit against the company for their failure to pay the benefit. Naturally this client was distraught after first losing her fiancé and now being told that the insurer intended to keep the proceeds of her fiancé’s policy. She had given up any and all hope of collecting any money from this company and would have probably settled for pennies on the dollar at that point. However, we both knew her late fiancé did nothing wrong and it was the insurer who was acting inappropriately.

In most instances, insurers are counting on the fact that people are so overwhelmed with grief that they will simply throw their hands in the air, take back their premiums and not pursue an action to collect the proceeds of the policy. Ironically my client was no different. I could see she had neither faith in this case nor the will to pursue it. Fortunately I never stopped pursuing this action until the entire amount plus interest from the date of death was collected.

If you feel like someone is trying to take advantage of you after the death of a loved one you are not alone. Unfortunately, when people are at their weakest some will seek to take advantage of their vulnerability. This is never truer than after the death of a loved one. If you or a loved one would like to speak to a NY estate lawyer with litigation experience, call the Law Offices of Jason W. Stern & Associates at (718) 261-2444 for a free consultation.

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