If you’re someone who uses drugs or has a history of substance abuse, the prospect of securing life insurance can evoke a unique set of concerns and challenges. You likely worry — can a life insurance claim be denied for drug use?
It’s a legitimate fear that we’ll cover in this blog post. We’ll discuss how drug use influences your ability to obtain life insurance coverage in the first place, offering invaluable insights from the legal professionals at Boonswang Law to guide you through this process.
Contact Boonswang Law today to receive expert legal advice if your life insurance claim has been denied for past or present drug use.
What You Need to Disclose About Drug Use
When it comes to applying for life insurance, transparency reigns supreme. Insurers operate on a foundation of trust, making honesty throughout the application process non-negotiable. Central to this honesty is the disclosure of any past or current drug use.
Share the type of drugs you’ve used, the frequency of your usage, and any associated health issues or treatments with your insurer. By painting a picture of your relationship with drugs, you not only uphold the integrity of your application but also lay the groundwork for a solid foundation of trust with your insurer.
Be prepared to answer the following questions your insurance company may ask about your drug use:
- What types of drugs have you used?
- Were you ever hospitalized as a result of using drugs?
- Have you recently relapsed?
- Have you ever been placed in either inpatient or outpatient treatment due to drug use?
When a Life Insurance Claim Can Be Denied For Drug Use
While drug use alone may not automatically lead to a denied life insurance claim, certain circumstances related to substance abuse can result in coverage denial. Here are some scenarios where a claim might be rejected:
Death During Contestability Period
Life insurance policies typically have a contestability period, usually the first two years after the policy goes into effect. It is important to note that contestability periods reset upon the reinstatement or purchase of a new policy. During this time, insurers can investigate and deny claims based on misrepresentation or nondisclosure. If the insured dies as a result of drug use, and the insurer discovers that the drug use was not disclosed or misrepresented during the application process, they may deny the claim.
Death From Overdose
If the cause of death is determined to be accidental drug overdose, the life insurance company may deny the claim if drug use was not disclosed or if the policy contains an exclusion for deaths related to drug use. Even if the overdose was unintentional or accidental, failure to initially disclose drug use could result in a claim denial.
Death Under the Influence
If the insured dies as a result of an accident or injury while under the influence of drugs, the life insurance company may deny the claim. Being impaired by drugs at the time of death could be considered negligence or reckless behavior, which may void coverage.
How Substance Use Affects Your Ability to Get Life Insurance
Aside from the risk of claim denial, substance use can also impact your ability to obtain life insurance coverage from the start. Insurers assess the level of risk associated with each applicant, and drug use is considered a risk factor. Depending on the type and frequency of drug use, you may face higher premiums or be denied coverage altogether.
Suppose you have a history of substance abuse. In that case, it’s essential to work with an experienced insurance agent who can help you navigate the application process and find a policy that meets your needs. By being upfront about your drug use and understanding the potential consequences, you can ensure that your loved ones are protected financially in the event of your passing.
What About Prescription Drugs?
Prescription drugs can affect your life insurance payouts, especially if they are used for managing conditions linked to past or current substance abuse. It is important to disclose all prescription medications you’re taking during the application process or you risk denials, as insurers will review how they might impact your overall health and risk profile.
Alcohol & Life Insurance Claims
Alcohol use can also influence life insurance payouts and lead to denials, particularly if there is a history of alcohol abuse. Insurers may assess the frequency and severity of alcohol use to determine the level of risk, which could result in higher premiums or potential denial of coverage.
How the Kind of Substance Affects Life Insurance Claims
The type of substance used directly influences how life insurance companies assess risk and determine coverage. Substances like marijuana, prescription drugs, or cocaine each present different levels of concern that can affect your eligibility and may lead to your insurance company denying payouts to your beneficiaries.
Marijuana
Life insurance companies may consider occasional marijuana use less risky, especially in states where it’s legal, but frequent use could still lead to higher premiums or additional health assessments.
Illicit Drugs
The use of illicit drugs such as cocaine or heroin is viewed as extremely high-risk by insurers, often leading to denial of claims due to the severe health and legal risks associated with these substances.
Past Vs. Present Drug Use
Past drug use may still allow for life insurance coverage and payments, but it typically requires thorough disclosure and may result in higher premiums or policy limitations. In contrast, ongoing drug use is considered a greater risk, often leading to outright denial of coverage and claims or much stricter policy conditions.
Drug Use Relapse & Life Insurance Claims
Relapsing into drug use raises serious concerns for life insurers, as it signals a pattern that could continue. This history may lead to higher premiums, exclusion clauses, or even denial of claims if a relapse contributes to the cause of death.
Other Reasons a Life Insurance Claim May Be Denied
While past drug use presents a significant concern for life insurance applicants, it is not the only factor that can impact the validity of a claim. Life insurance policies are fraught with legal nuances, and navigating the landscape of claim denials requires a keen understanding of potential pitfalls.
1) Suicide or health-related deaths (for accidental policies)
So-called “Accidental Death & Dismemberment” policies (AD&D) are commonly sold under the impression that if the insured dies of a non-natural, “accidental” cause, a death benefit will be paid to his or her beneficiaries. However, it is common for accidental death insurance claims to be denied. Insurance companies often define “accident” arbitrarily , in which long lists of provisions must be satisfied before they agree to pay out. For this reason, companies will frequently base their denial on evidence surrounding the circumstances of the insured’s death. It should be noted that AD&D policies never cover suicide or health-related deaths since both of these scenarios would not qualify as an “accident.”
We recently settled a matter where the insured died from severe injuries he sustained in a motorcycle accident several weeks after the accident. Our client’s claim was initially denied based on “acute amphetamine intoxication” and benzodiazepine use. However, no medical history was available, no autopsy was ever performed, and the medical examiner never viewed the body. We argued that the insured’s cause of death was the injuries sustained from the accident, having nothing to do with drug use, that the foreseeability of the accident is legally irrelevant, and that even deaths resulting from negligence (taking drugs then driving) may still be an accident. We got our client paid.
2) Death during first 2 years of policy
In most states, the first two years of a life insurance policy are considered the “contestability period,” i.e., the period of time during which an insurance company can review and fact-check information on a life insurance application (see our previous blog post about what happens when someone dies shortly after getting life insurance).
If the insured dies during the contestability period, the company will perform a full investigation of the individual’s medical records as well as any other information requested on the application. This includes scrutinizing any disclosed or undisclosed drug use, as misrepresentation or omission regarding substance use could result in a denial of the claim. This means that if there were any misrepresentations, falsities, or omissions on the application, the insurance company may retroactively cancel the policy and refund premiums instead of paying the full death benefit.
This is an extremely common tactic among insurance companies, even when the misrepresentation is unrelated to the insured’s death. In cases involving drug use, even if the substance did not contribute to the death, failing to disclose it could be grounds for denial.
For example, we got our beneficiary client paid in full when the insured died within the contestability period of heart failure. We argued that the insured had no history of heart failure and, therefore, could not disclose that.
You should know also that most life insurance policies contain a two-year “suicide clause,” in which claims can be denied in the event of a policyholder’s suicide. This is meant to deter people from buying policies with the intention of committing suicide shortly afterward, thereby leaving life insurance benefits for their family members. However, suicide is not always clear-cut, and life insurance companies will frequently deny claims when there exists a mere possibility of suicide. If drug use is suspected to be involved in the suicide, the insurer may use this as further justification for denying the claim.
3) Nonpayment of premiums
When you buy a life insurance policy, the insurance company’s obligation to pay out is contingent on the policyholder having paid the premiums (see our previous blog post). If you forget to pay, the insurance company typically provides a “grace period” for making late payments of around one month from the due date.
If you do not pay within the grace period, the policy will “lapse,” and you will no longer be covered. This risk can be heightened for individuals struggling with substance use, as financial instability or the effects of drug use may lead to missed payments and subsequent policy lapse. Even if you’ve been paying diligently for decades, your policy can be terminated after missing one premium payment.
However, sometimes policy lapse and termination happen without the insured’s fault. For example, if ERISA controls, there are many safeguards in place for an insured who does not receive the required notices and application for conversion—beneficiaries can get paid even if the policy lapses in these circumstances. In cases where drug use is involved, it’s essential to address these issues promptly to avoid complications with policy payments and coverage.
4) Homicide
In most cases, life insurance policies should pay out in the event of homicide. However, there are specific circumstances in which insurance companies could deny a beneficiary’s claim in the event of the insured’s murder. For instance, if the beneficiary is under investigation for homicide of the insured, then the beneficiary will not receive the death benefit until cleared of any involvement in the insured’s death. Additionally, life insurance companies will almost never pay out if the insured was murdered while participating in unlawful/criminal activity.
We had one case where the insured was murdered. He was a drug user and the beneficiary’s claim was denied based on misrepresentation. We successfully argued that the agent did not probe into the insured’s drug use, that the insured was never asked whether he was treated for drug abuse, and that drug abuse had nothing to do with the cause of death. Our client was paid in full.
5) Policy clause said it doesn’t pay out for…
Insurance companies will frequently stipulate that they do not have to pay the benefit for arbitrary reasons. This is especially the case in AD&D policies, in which companies will define “accidental” death in a manner that is deliberately hard to satisfy. For example, if the insured’s death involved drug use, even if it wasn’t the direct cause, the insurer might argue that the death doesn’t meet their strict definition of “accidental” and deny the claim. Common provisions are that the insured must die within 90 days of the injury that caused his or her death and that death in an airplane is not covered if you are a pilot.
Recently, we settled a case where the insured died of drowning, but he drowned due to an undiagnosed heart condition. We argued that an “accident” is an event that is not a natural and probable result of the insured’s own acts. Here, there was no way the drowning could have been naturally and probably expected or anticipated by the insured when it was caused by his undiagnosed heart condition. Our client got paid. In similar cases, if the insured had a history of drug use, the insurer might attempt to link the death to substance use as a way to deny the life insurance claim under the policy’s clauses.
Life insurance companies often deny beneficiaries’ claims for these reasons, even when they are legally required to pay out. When drug use is involved, these denials may become even more frequent as insurers seek to leverage policy clauses to avoid payment.
How do I appeal a denied life insurance claim?
Was your life insurance claim denied due to drug use? If you believe your life insurance or AD&D claim has been unlawfully delayed or denied, don’t hesitate to contact an experienced life insurance beneficiary lawyer at Boonswang Law for a free case evaluation. Simply put, we get our clients paid.
