If you’re someone who uses drugs or has a history of substance abuse, the prospect of securing life insurance can evoke a unique set of concerns and challenges. You likely have the worry — can a life insurance claim be denied for drug use?
It’s a legitimate fear, one that we’ll cover in this blog post. We’ll discuss how drug use influences your ability to obtain life insurance coverage in the first place, offering invaluable insights from the legal professionals at Boonswang Law to guide you through this process.
Contact Boonswang Law today to receive expert legal advice if your life insurance claim has been denied for past or present drug use.
What You Need to Disclose About Drug Use
When it comes to applying for life insurance, transparency reigns supreme. Insurers operate on a foundation of trust, making honesty throughout the application process non-negotiable. Central to this honesty is the disclosure of any past or current drug use.
Share the type of drugs you’ve used, the frequency of your usage, and any associated health issues or treatments with your insurer. By painting a comprehensive picture of your relationship with drugs, you not only uphold the integrity of your application but also lay the groundwork for a solid foundation of trust with your insurer.
Be prepared to answer the following questions your insurance company may ask about your drug use:
- What types of drugs have you used?
- Were you ever hospitalized as a result of using drugs?
- Have you recently relapsed?
- Have you ever been placed in either inpatient or outpatient treatment due to drug use?
When a Life Insurance Claim Can Be Denied For Drug Use
While drug use alone may not automatically lead to a denied life insurance claim, certain circ*mstances related to substance abuse can result in coverage denial. Here are some scenarios where a claim might be rejected:
Death During Contestability Period
Most life insurance policies have a contestability period, usually the first two years after the policy goes into effect. During this time, insurers have the right to investigate and deny claims based on misrepresentation or nondisclosure. If the insured dies as a result of drug use, and the insurer discovers that the drug use was not disclosed or misrepresented during the application process, they may deny the claim.
Death From Overdose
If the cause of death is determined to be a drug overdose, the life insurance company may deny the claim if drug use was not disclosed or if the policy contains an exclusion for deaths related to drug use. Even if the overdose was unintentional or accidental, failure to initially disclose drug use could result in claim denial.
Death Under the Influence
If the insured dies as a result of an accident or injury while under the influence of drugs, the life insurance company may deny the claim. Being impaired by drugs at the time of death could be considered negligence or reckless behavior, which may void coverage.
How Substance Use Affects Your Ability to Get Life Insurance
Aside from the risk of claim denial, substance use can also impact your ability to obtain life insurance coverage from the start. Insurers assess the level of risk associated with each applicant, and drug use is considered a risk factor. Depending on the type and frequency of drug use, you may face higher premiums or be denied coverage altogether.
If you have a history of substance abuse, it’s essential to work with an experienced insurance agent who can help you navigate the application process and find a policy that meets your needs. By being upfront about your drug use and understanding the potential consequences, you can ensure that your loved ones are protected financially in the event of your passing.
Other Reasons a Life Insurance Claim May Be Denied
While drug use presents a significant concern for life insurance applicants, it’s not the only factor that can impact the validity of a claim. Life insurance policies are fraught with legal nuances, and navigating the landscape of claim denials requires a keen understanding of potential pitfalls.
1) Suicide or health-related deaths (for accidental policies)
So-called “Accidental Death & Dismemberment” policies (AD&D) are commonly sold under the impression that if the insured dies of a non-natural, “accidental” cause, a death benefit will be paid to his or her beneficiaries. However, it is common for accidental death insurance claims to be denied. Insurance companies often define “accident” in an arbitrarily specific manner, in which long lists of provisions must be satisfied before they agree to pay out. For this reason, companies will frequently base their denial on evidence surrounding the circ*mstances of the insured’s death. It should be noted that AD&D policies never cover suicide or health-related deaths, since both of these scenarios would not qualify as an “accident.”
We recently settled a matter where the insured died from severe injuries he sustained in a motorcycle accident, several weeks after the accident. Our client’s claim was initially denied based on “acute amphetamine intoxication” and benzodiazipine use, although no medical history was available, no autopsy was ever performed, and the medical examiner never viewed the body. We argued that the insured’s cause of death was the injuries sustained from the accident, having nothing to do with drug use, that foreseeability of the accident is legally irrelevant, and that even deaths resulting from negligence (taking drugs then driving) may still be an accident. We got our client paid!
2) Death during first 2 years of policy
In most states, the first two years of a life insurance policy are considered the “contestability period,” i.e. the period of time during which an insurance company can review and fact-check information on a life insurance application (see our previous blog post about what happens when someone dies shortly after getting life insurance).
If the insured dies during the contestability period, the company will do a full investigation of the individual’s medical records as well as any other information requested on the application. This means that if there were any misrepresentations, falsities, or omissions on the application, the insurance company may retroactively cancel the policy and refund premiums instead of paying the full death benefit. This is an extremely common tactic among insurance companies, even when the misrepresentation in question is unrelated to the insured’s death. All too frequently, life insurance claims are denied because of mistakes on an application.
For example, we got our beneficiary client paid in full when the insured died within the contestability period of heart failure. We argued that the insured had no history of heart failure therefore could not disclose that.
You should know also that most life insurance policies contain a two-year “suicide clause,” in which claims can be denied in the event of a policyholder’s suicide. This is meant to deter people from buying policies with the intention of committing suicide shortly afterward, thereby leaving large life insurance benefits for their family members. However, suicide is not always clear-cut, and life insurance companies will frequently deny claims when there exists a mere possibility of suicide.
3) Nonpayment of premiums
When you buy a life insurance policy, the insurance company’s obligation to pay out is contingent on the policyholder having paid the premiums (see our previous blog post). If you forget to pay, the insurance company will typically provide a “grace period” for making late payments of around one month from the due date. If you do not pay within the grace period, the policy will “lapse,” and you will no longer be covered. Even if you’ve been paying diligently for decades, your policy can be terminated after missing one premium payment.
However, sometimes policy lapse and termination happens through no fault of the insured. For example, if ERISA controls, there are many safeguards in place for an insured who does not receive the required notices and application for conversion – beneficiaries can get paid even if the policy lapsed in these circ*mstances!
4) Homicide
In most cases, life insurance policies should pay out in the event of homicide. However, there are specific circ*mstances in which insurance companies could deny a beneficiary’s claim in the event of the insured’s murder. For instance, if the beneficiary is under investigation for homicide of the insured, then the beneficiary will not receive the death benefit until cleared of any involvement in the insured’s death. Additionally, life insurance companies will almost never pay out if the insured was murdered while participating in unlawful/criminal activity.
We had one case where the insured was murdered. He was a drug user and the beneficiary’s claim was denied based on misrepresentation. We successfully argued that the agent did not probe into the insured’s drug use, that the insured was never asked whether he was treated for drug abuse, and that drug abuse had nothing to do with the cause of death. Our client was paid in full.
5) Policy clause said it doesn’t pay out for…
Insurance companies will frequently stipulate that they don’t have to pay the benefit for arbitrary reasons. This is especially the case in AD&D policies, in which companies will define “accidental” death in a manner that is deliberately hard to satisfy. Common provisions are that the insured must die within 90 days of the injury that caused his or her death and that death in an airplane is not covered if you are a pilot.
Recently, we settled a case where the insured died of drowning, but he drowned due to an undiagnosed heart condition. We argued that “accident” is an event that is not a natural and probable result of the insured’s own acts. Here, there was no way the drowning could have been naturally and probably expected or anticipated by the insured when it was caused by his undiagnosed heart condition. Our client got paid.
Life insurance companies often deny beneficiaries’ claims for these reasons, even when they are legally required to pay out.
How do I appeal a denied life insurance claim?
Was your life insurance claim denied? If you believe your life insurance or AD&D claim has been unlawfully delayed or denied, don’t hesitate to contact an experienced life insurance beneficiary lawyer at Boonswang Law for a free case evaluation. We get our clients paid!
Chad G. Boonswang, Esquire is a litigation lawyer based in Philadelphia, PA. Selected as an ASLA 2014, 2015, 2016, 2017 and 2018 Top 100 Litigation Lawyer, Mr. Boonswang plays to win. As a lawyer, athlete, and scholar, he has always put in the energy, time, and commitment to be the best. After working for several prominent law firms in Philadelphia, including Montgomery McCracken Walker & Rhoads LLP, he founded his own practice in 2002. Since then Chad has recovered tens of millions of dollars on behalf of his clients from life insurance claims and catastrophic injury cases. Year after year, he has earned a10.00 Superb rating on Avvo.
