Yes, it is entirely possible to sue for life insurance proceeds in certain situations. Disputes regarding life insurance proceeds can arise for so many reasons. One of them is disagreement over a beneficiary designation.
It could also be as a result of delayed payment on the part of the insurance company or policy interpretation disputes. Whichever case it may be, you can take legal action if you notice a foul play in the distribution of proceeds of the policy’s benefits after the policyholder passes away.
Understanding the laws and rights you have as a beneficiary of the life insurance policy is essential. This would help you navigate the complexities of life insurance proceeds and when to file a lawsuit if you feel cheated.
Who Can I Sue for Life Insurance Proceeds?
In the process of taking legal action for life insurance proceeds, it is important to know how to identify the exact party to sue. Usually, the nature of the issue regarding the life insurance proceeds determines who is to be sued. You can sue:
- The insurance company
- Policyholders’ estate
- Third parties
- Legal representatives
- Other beneficiaries of the policy
However, before filing for a legal action against any of the aforementioned set of people, ensure you have a solid ground for the lawsuit. If you are suing the insurance company, they must have delayed or denied multiple claims for no valid reason.
If the dispute is caused by other beneficiaries named in the policy, such as disagreeing over the designation of a particular beneficiary, then you can take legal action.
Who is Entitled to Life Insurance Proceeds?
Primarily, before activating a life insurance policy, your insurance company will ask that you select at least one or two beneficiaries on your policy.
These people are the categories of those that are entitled to the policy’s benefit after your demise. The beneficiaries on your life insurance policy can be a:
- Primary beneficiary.
- Contingent beneficiary.
- Revocable beneficiary.
- Irrevocable beneficiary.
These people are entitled to life insurance proceeds if the policyholder passes on. It is the duty of the policyholder to inform the beneficiaries of their status on the policy. This allows them to know the percentage of proceeds they are entitled to.
Reasons for Life Insurance Proceeds Disputes
There are several reasons why there may be disputes about life insurance proceeds, some of which include:
- Changes in beneficiary designation: This is one of the ways through which a dispute can occur over life insurance proceeds. After a major life event such as divorce, which automatically means the separation of the couple, a controversy can arise about sharing of the policy’s benefit.
- Unjust removal: Beneficiaries who are removed unjustly from the life insurance policy can file a lawsuit if they have a legitimate reason why they should not be excluded from the policy. Legal interventions go a long way in ensuring that beneficiary exclusion and unjust removal are rectified.
- Bad faith practices by insurance providers: Some insurance companies may either delay or deny a claim for no reason. And once this happens, an issue can arise between the insurer and the policyholder or beneficiaries of the policy.
What Is The Process Of Filing A Law Suit For Life Insurance Proceeds?
Before filing a lawsuit for life insurance proceeds, it is paramount to understand the process involved. There is a legal way to go about that, and we have curated the steps below:
• Consult an attorney
The legal process of filing a lawsuit for life insurance proceeds demands guidance from a professional who specializes in life insurance disputes. The first step you need to take before filing a lawsuit is to consult an attorney who would assist in navigating the intricacies of your case.
• Evaluate the denial
In order to check if there’s a ground for a lawsuit, it is important to review the reasons for the claim denial, and this has to be done under the supervision of your attorney. Once you have reviewed the reason and found a tangible cause to sue, discuss with your attorney on how to go about it.
• Gather all necessary documents
In the event of filing a lawsuit for life insurance proceeds, you will be required to provide certain documents that support your claim. Some of the documents include the insurance policy and correspondence with the insurance company. Also, you may be asked to provide other supporting documents; ensure you gather them early enough.
• File a legal complaint
Once you are done collecting the required documentation, the next step is to file a complaint highlighting the issue you want to be resolved. Your attorney will be the one to prepare, outline the case, and send it to the court.
• Engage in pre-trial and settlement discussions
If there are motions to straighten out certain legal issues before the trial, you can use this as an opportunity to negotiate your terms and reach a conclusion that benefits you.
• Proceed to trial
If, during the process of engaging in pre-trial motion, a settlement is not reached, the next step is to proceed to trial. At this stage, the parties involved will have to present their arguments, provide necessary documentation, and witness testimonies if applicable. The result of the trial will be determined by the judge in charge of the life insurance proceeds dispute.
• Await judgment
After the trial, the judges will reach a consensus, and a judgment will be passed. The result of the judgment issued will determine your next step. If it does not favor you, you can appeal the decision of the court.
FAQs
How long does a life insurance lawsuit take?
Well, the length of a life insurance law suit depends on the process by which the court handles such situations. But generally, a life insurance lawsuit can be resolved within a few months. If it is a severe dispute, it can stretch for some years. If it extends beyond months, it is because it is a complex issue that involves multiple parties in the lawsuit.
Is there a time limit to contest for life insurance proceeds?
Of course there is! The time limit for contesting life insurance proceeds solely depends on the terms of the life insurance policy, including state laws.
In essence, the time limit varies significantly. So you need to understand the terms of the policy and the laws that govern life insurance proceeds in your state. By understanding this, you would be able to act quickly for prompt legal action.
What triggers a life insurance proceeds dispute?
Life insurance proceeds can be disputed due to several reasons. This includes claim denials, refusal to agree with the beneficiary’s resignation, and other reasons that affect the policy.
