According to South Carolina’s precedential law, the only way for an insurance company to void or to avoid an unfair or unjust life insurance policy is to have something called ” misrepresentation” at play.
In order for there to be misrepresentation, there mist be six elements first met:
” (1) the statements complained of were untrue, (2) the statements falsity was known to the applicant, (3) they were material statements, ( meaning in modern terms, not common law, that if the risk was increased and actually contributed tot eh loss, it was material enough to fit the third prong), (4) the carrier relied on the statements, and (6) the insurer must challenge the truthfulness of the application within the first two years of the application being submitted.” S.C. Code Ann. 38-63-220(d)(2002.)
If all the elements are met, and the two year statute of limitations has not yet run, then the insurance company is well within it bounds to make a claim that the insure lied about a material fact that increased the risk of the problem in the first place.
So, for example, a insure lies about being a smoker, and then one day keels over from lung cancer. The misrepresentation to the insurance company that the insured did not smoke was so material that it actually increased or caused the risk.
This would be a perfect example of why it is never right to lie tot he insurance companies on what you do. With the new health bill being threatened, most people are afraid as it is to even talk about life insurance. However, that does not mean that the life insurance company would necessarily pay out, as seen in the example given above.
Our attorneys at Reeves, Aiken, and Hightower, LLP have worked on both ends of the insurance spectrum, both for and against them. If you find yourself in the aforementioned situation, you ma have claim for bad faith, and so may the insurance company. If that if the case, contact us today at 877-374-5999 toll-free for more information.