Life Insurance Rescission

People buy life insurance to provide for their loved ones and business partners in the event of the worst possible situation, to provide a safety net of financial protection in times of need. However, when a claim is made in the first two years of a policy, insurance companies have the legal right (but not the legal obligation), to review the application and relevant medical records to determine whether the applicant may have given false, misleading or inaccurate information about either their current health or health history during the application process. This is intended to prevent “gambling”, where someone omits or conceals the fact that they were recently diagnosed with cancer, for example, and takes out an insurance policy to provide for their family. If an
insurance company can find a false or misleading answer to one or more questions, regardless of any intent to deceive by the insured, chances are they will deny the claim, rescind the policy and return the premiums that were paid.

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Just because the insurance company says that it has rescinded the policy does not mean that it had the legal right to do so. Ultimately, a rescission case often boils down to exactly  what questions were in the application that was actually attached to, and thus a part of the policy. Many times, an insurance company will have the applicant (or a nurse) fill out a preliminary, background application. While that application is part of the file, it may not be attached to the policy. Georgia, like most states, precludes an insurance company from rescinding an insurance policy based on answers to questions in an application unless a true and correct copy of the particular application was attached to the policy as it was issued or provided to the insured. We have seen cases where the insurance company actually altered the policy to include answers to background questions that were not actually part of the policy to justify rescission of millions of dollars of insurance.

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Consequently, it is extremely important to carefully preserve the insurance policy in its original state.  This includes staples and bindings, as these can be proof that the policy (with or without application) is in its original, pristine and untouched condition as delivered to the policyholder by the insurance company.  Faced with an insurer’s rescission claim and allegations of policy application misstatements, you may be unsure about what to do and whether there is any recourse.  Before cashing the check, it is very important that you talk to an experienced lawyer in the field of life insurance rescission cases. If you cash or deposit the returned premium check, you may be barred from taking legal action to challenge the rescission. Our lawyers are ready to review your insurance company’s rescission allegations and assert all appropriate claims and defenses to protect your life insurance investment.