When a proposed insured applies for larger life insurance policies, it is common for an insurance company to require answers to a series of health questions. Usually, insurers will not request medical records to confirm the accuracy of the answers to the questions before issuing the policy and accepting premiums. However, if an insured dies within two years of the policy being issued, usually called the “contestability” period, insurance companies often request medical records to determine if the answers to the questions on the application were accurate.  If it finds that the answers were inaccurate when the application was submitted, the insurer will often deny payment of the claim to the designated beneficiary or beneficiaries.

If an insurer denies a claim after this evaluation, it is important not to take the denial at face value. An attorney experienced in this area can challenge an insurance company’s denial in court, and Louisiana law is more favorable for beneficiaries than many other states.

Louisiana Revised Statute 22: 860 states:

                A. Except as provided in Subsection B of this Section, R.S. 22:1314, and 1315, no oral or written misrepresentation or warranty made in the negotiation of an insurance contract, by the insured or in his behalf, shall be deemed material or defeat or void the contract or prevent it attaching, unless the misrepresentation or warranty is made with the intent to deceive.

                B. In any application for life, annuity, or health and accident insurance made in writing by the insured, all statements therein made by the insured shall, in the absence of fraud, be deemed representations and not warranties. The falsity of any such statement shall not bar the right to recovery under the contract unless either one of the following is true as to the applicant’s statement:

(1) The false statement was made with actual intent to deceive.

(2) The false statement materially affected either the acceptance of the risk or the hazard assumed by the insurer under the policy.

The jurisprudence interpreting this statute places the burden of proof upon the insurer. Cousin v. Page, 372 So.2d 1231 (La., 1979). The statute provides that a false statement bars recovery only if the insurer proves it is made with the intent to deceive or if it materially affects the risk. However, Louisiana jurisprudence requires the insurer to prove both factors. Antill v. Time Ins. Co., 460 So.2d 677 (La.App. 1st Cir.1984); Coleman v. Occidental Life Ins. Co. of N.C., 418 So.2d 645 (La.1982).

Courts look to the surrounding circumstances indicating the insured’s knowledge of the falsity of the representation made in the application and his recognition of the materiality of his misrepresentations, or from circumstances which create a reasonable assumption that the insured recognized the materiality. Cousin, 372 2.d at 1233;  Henry v. State Farm Mut. Auto. Ins. Co., 465 So.2d 276 (La.App. 3rd Cir.1985); Davis v. State Farm Mut. Auto. Ins. Co., 415 So.2d 501 (La.App. 1st Cir.1982). 

Therefore, if a beneficiary can show that the proposed insured did not recognize the materiality of his misrepresentation, did not recognize his misrepresentation was indeed a misrepresentation, or that the misrepresentation did not affect the risk undertaken by the insurer, he or she might be able to overturn the denial in court.