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What you need to know about material misrepresentation in life insurance

material misrepresentation in life insurance

Material misrepresentation is one of the main reasons why insurance companies void life policies. While most states have passed laws that limit instances where this can be a basis for voiding the policy, it still happens. To be on the safe side, it is best to understand material representation, and how it applies in the insurance industry. Here is what you need to know about material misrepresentation in life insurance.

What is a material misrepresentation?

To better deal with material misrepresentation, you first need to understand what it means. In insurance, it stands for a situation where the insured hides some facts that would have changed the terms of the contract. For instance, if someone has diabetes, and does not disclose it, an insurance company can take advantage of it to void the contract.

What protections are there for you?

Most States have protections that prevent insurance companies from using flimsy grounds to void an insurance contract. In some states, such as California, if the misrepresentation is immaterial, an insurance company cannot void the contract. Other States, such as Nebraska and South Carolina, are more specific about misrepresentation. In these states, an insurer cannot void a life policy if the misrepresentation does not cause the insurer a loss. For instance, if an insured person fails to disclose that they are suffering from a chronic illness, and they die of a road accident, an insurer cannot void that policy. The goal is to protect policyholders from mischief by insurers.

Mischief still happens

While States have put in place measures to protect policyholders, mischief still happens and insurance companies find grounds to void policies. That’s because they have a good understanding of the law, and have the best insurance lawyers in place. This means they can easily find loopholes that a layman cannot see. For instance, in California, an insurer cannot void a policy if the misrepresentation is immaterial. But how do you determine what is immaterial or not? This is not something that a layman cannot easily make out without the help of a lawyer. As such, lots of people end up losing out on life insurance money, due to lack of knowledge.

The need for a lawyer

Due to such complexities in the interpretation of what constitutes misrepresentation, it is important to hire a good lawyer when pursuing compensation. A law firm like Boonswang law handles material misrepresentation cases all the time. Their lawyers know all the tricks that insurance companies use, and the best strategies to counter them in court. This reduces your chances of missing out on payments, due to technicalities in your case. Besides, even in cases where the law is clear, the average person may not be aware of what the law says. Insurers can take advantage of this and find grounds to void the policy. In essence, engaging a lawyer is the best bet when pursuing payment for life insurance. The potential payout is much higher than taking the risk of pursuing such payments by yourself.

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