AUTHOR/SPEAKER
Managing  Director
Lance Wallach

Member of the AICPA faculty of teaching
professionals, AICPA author, instructor
and national speaker. Named the
National Society of Accountants
Speaker of the Year. Writes financial  
articles for over 50 national publications.
Life Insurance claim denials are a common practice by insurance companies. After a policy holder dies, the
insurance company reviews both the claim filed by the beneficiaries of the insured and the policy itself, in
search of possible details that can be used as a reason to deny the claim.

This practice is also called life insurance rescission and it effectively reverses the contract that was made
when the policyholder purchased the life insurance policy. The insurance company may argue that
omissions or errors made by the policy holder on his initial application were misrepresentations that render
the contract null and void. Life insurance rescission were originally devised to help insurance companies
mitigate the financial risks associated with life insurance fraud but now have become a way for life insurance
companies to minimize costs and maximize profits—often at the expense of bereaved family members
struggling to cover funeral costs and leftover medical bills.

Even on grounds of misrepresentation there are time constraints on an insurance carrier’s ability to seek to
cancel an insurance policy or issue a life insurance claim denial, they must include an “incontestability
clause,” which bars insurers from challenging a life insurance claim after the life insurance policy has been in
effect for at least two consecutive years. For example, in Ilyaich v. Bankers Life Ins. Co. of New York,
according to the Court, the life insurance company’s failure to verify the information found in the application
within two years barred the life insurance company from denying claims.

Every state, including New York and New Jersey, requires that lawsuits concerning life insurance claim
denials be filed promptly, before the statute of limitations runs out so If you have lost a loved one and the life
insurance company has denied your life insurance claim, your ability to recover life insurance benefits might
not be lost.


    Contact Lance Wallach at 516-938-5007 | LaWallach@aol.com



The complexity of life insurance puts many litigators at a disadvantage
when disputes reach the stage of legal action.

In addition, special rules often apply if policies are part of a retirement plan or other tax-favored
entity. Even the methods of paying for life insurance—especially split-dollar and outside premium
financing—can affect an outcome. Tax implications are another factor.

Lance Wallach is one of few professionals who knows how these pieces work both
alone and in conjunction with estate and financial planning.

In many situations, the plan the client bought or the manner in which he purchased it was
inappropriate. In other cases, the right product was sold in the right way but the purchaser was still
unhappy.

Lance wrote the book on life insurance that accountants and financial planners
read to prepare for CPE certification.

Lance uses his expert knowledge and vast experience to offer advice, opinions, and testimony to
attorneys, accountants, and other individuals facing life insurance litigation.

Lance Wallach's side has never lost a case.


Contact Lance Wallach at 516-938-5007
LaWallach@aol.com
Life Insurance Litigation Support
Expert Witness
Signs of Insurance Bad Faith
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Comments:
In the United States, it is understood that all contracts carry an implied covenant of good faith
and fair dealing. This legal principle was asserted by a 1933 ruling by the New York Court of
Appeals which stated;

    "In every contract there is an implied covenant that neither party shall do anything,
    which will have the effect of destroying or injuring the right of the other party, to
    receive the fruits of the contract, which means that in every contract there exists an
    implied covenant of good faith and fair dealing."

       This legal principle is even more important when it comes to insurance companies.
Consumers purchase insurance because they want to protect themselves, their families, their
property, or their businesses. However they have extremely limited bargaining power both upon
entering a contract with an insurance company and in a situation where the insurance company
refuses to make claim payments, failing to fulfill the terms of the contract.

In general, insurance companies only offer a 'take-it-or-leave-it' insurance policy, and the
customer has little or no ability to negotiate the terms of the policy. Since customers have little
wiggle room, the law requires insurance companies to treat their customers fairly. Many states
have gone an extra step and passed further regulations governing how insurance companies
must deal with customers and processing a customer claims for insurance benefits.

Insurance companies owe a duty of good faith and fair dealing to every person or company they
insure which means an insurance company is required to treat their customers fairly and
honestly. The reason the law places requires insurance companies is because insurance
companies are commonly so large and powerful that it is generally not possible for a customer to
negotiate the terms and details of an insurance policy in a fair manner.  
Insurance bad faith refers to an allegation that an insurance company treated a customer  
unfairly or inappropriately or was noncompliant with the state legislation on claim processing.
An insurance company can act in bad faith in a variety of ways.

Some examples include:
Failing to process a policyholder’s legitimate claim in a timely manner
Requiring excessive or unnecessary documentation from a policyholder while
processing a legitimate claim
Appointing and relying upon experts(medical, engineering, etc.) who seem to always
act in the interest of the insurance company
Refusing to comprehensively evaluate a claim for insurance benefits
Hiring and relying upon medical or engineering experts who always side with the
insurance company
Arguing that a legitimate claim for insurance benefits is not covered by the insurance
company
Asserting that a legitimate claim for insurance benefits is not covered by the
insurance policy
Paying only a portion of the benefits outlined by the policy rather than the full
benefits
Proposing an offer that does not reasonably cover the claimant’s needs


An insurance company can commit an act of bad faith while processing claims for all types of insurance--life, medical, disability, homeowner's, commercial and more. The most common
instances occur in claims for life insurance benefits, homeowner's insurance benefits, and
disability benefits.

Good Faith

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Life Insurance Claim Denied

LIFE INSURANCE LITIGATION
O F F I C E  o f  L A N C E   W A L L A C H
www.lifeinsurancelitigation.net  | 516-938-5007
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ITIGATION
O F F I C E  o f  L A N C E   W A L L A C H
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Direct: 516-938-5007
Email: lawallach@aol.com

Life Insurance Claim Benefits Denied?

LIFE INSURANCE LITIGATION
O F F I C E  o f  L A N C E   W A L L A C H
www.lifeinsurancelitigation.net  | 516-938-5007

LIFE INSURANCE LITIGATION
O F F I C E  o f  L A N C E   W A L L A C H
www.lifeinsurancelitigation.net  | 516-938-5007