Fort Worth life insurance lawyers may already know some of this – but just in case, here goes.
Life insurance pays a stated amount of benefits to the beneficiary upon the insured person’s death. The beneficiary is usually relatives but can be business partners and creditors. Usually, the policy has a “face amount value”. This would be the value paid by the insurance company upon the death of the insured. There are policies wherein the face amount is a starting point from which the amount stated is increased. An example would be a policy that pays a “double indemnity” for accidental deaths. This means that whatever the fact amount of the policy reads, such as $100,000, then that face amount doubles to $200,000 if death occurs as the result of an accident.
“Term” insurance policies pay a fixed amount stated in the policy if death occurs during the term of the policy. This is usually a stated time of 10 or 20 years.
“Whole life policies” accumulate a cash value, and will pay the face amount of the policy plus any accumulated cash value.
On the other hand, if the policy allows the insured to borrow against the policy, the face amount of the policy will be reduced by any amount that has been borrowed and still outstanding on the loan.
Issues affecting coverage may arise at the time the policy is issued, if the insured does not accurately disclose his health or other material information, or if the insured dies or his health materially worsens before the policy is issued. Disputes may also arise if the insurance company refuses coverage. Knowledge of the Texas Insurance Code, Sections 705.004 and 705.104 are important at this point.
Disputes may arise over the performance of the policy, if the insurance company represented a certain level of premiums but failed to adhere to that representation.
Issues that may arise upon the death of the insured include:
1) whether the insured is really dead; (this doesn’t occur often but certainly we have all seen the news accounts of situations where it has occured)
2) whether the insured died from a covered cause; (an example would be where a policy only covers accidental death and there is a dispute whether the death was accidental, intentional, or natural) and 3) who receives the proceeds. (This can be a pretty common dispute where a husband names a wife as beneficiary but she dies before him or vice-a-versa)
As to #3, there are appropriate ways for the insurance company to handle these situations which they often violate.
If any of these situations arise, it would be necessary to see an attorney who handles these types of life insurance disputes.
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