Credit disability insurance is insurance offered by lenders (banks and credit card companies) that will make payments on your debt if you can’t work because of illness or injury. This type of insurance is available in connection with home mortgages, loans for the purchase of big-ticket items (cars, motorcycles, boats, etc.), and credit card debts.
Credit disability insurance is usually paid for by a monthly fee that is added to your loan or credit card payment. Typically, if you become disabled, the insurance will make your payments for a limited time of only 12 to 24 months.
People who buy credit disability insurance expect that by paying the monthly fee, they will be protected in the event of a disability. The truth is that people are frequently and unknowingly abused by this system. They pay their monthly fees, only to have their claims denied or learn that the coverage is much less than expected. As a skilled Credit disability insurance claim denied attorney, Jonathan M. Feigenbaum, Esquire, provides effective legal representation to people who are fighting to get their disability credit insurance providers to live up to their obligations.
Types of Credit Insurance
Credit insurance has a number of varieties:
Credit life insurance – Credit life insurance pays off the balance of a loan in the event of your death. Essentially, the lender is named as a beneficiary on the policy. In fact, no one else besides a lender can be named as a beneficiary of a credit life insurance policy.
Credit disability insurance – Like life insurance, credit disability insurance pays a creditor in the event that you become disabled and can no longer sustain gainful employment.
Involuntary unemployment insurance – Similar to credit disability insurance, but pays out in the event of a layoff or downsizing.
Credit property insurance – Insures property that you are still making payments on in the event that the property is destroyed by a specific disaster covered by the policy.
Why Would I Need a Lawyer to File This Type of Claim?
Credit insurance is easy to purchase. In fact, insurance companies will offer this insurance without thoroughly establishing that the policyholder to whom they’ve sold the policy qualifies under the terms of the policy. There’s no screening process or application process. The premiums are simply rolled into the loan payment.
To provide a simple example, let’s say you purchase involuntary unemployment insurance. The company that is backing your loan isn’t checking to see if you’re unemployed. If you are, they can deny the claim even though you were paying into it. The only criteria that insurance companies look for is a line of credit.
Typically, multiple forms of protection are bundled together making this more confusing for policyholders. Policyholders simply assume that if they’re allowed to purchase the insurance, that the policy will cover them. Yet the insurance companies won’t even go so far as to establish the fact that you’re employed when selling you unemployment protection.
Why Are Credit Disability Insurance Claims Denied?
The most common reason for denying a credit disability insurance claim is a policy exclusion. Often, these policy exclusions were in place when the insurance policy was sold to the policyholder.
As an example, credit life insurance policies are often used to back car loans. If a person dies before they can pay off the loan, they don’t want to saddle their estate with the debt. However, when they signed the contract, they didn’t realize that they had to be under the age of 50 to receive benefits. The insurance company never asked their age. When they purchased the policy, they were 51. So they’d been paying into the policy for years with no hope of ever enjoying the benefits of it.
In other cases, they will accuse the policyholder of misrepresenting facts that would have led to an exclusion.
An Example of Bad Faith Credit Disability Insurance Denial
Household Life Insurance was recently in the news after a policyholder alleged they denied his claim in bad faith. In this case, the policyholder purchased credit disability insurance to back their mortgage loan. The terms of the policy appeared to indicate that Household Life would pay the mortgage indefinitely should the policyholder become disabled. Instead, they made 24 payments and then stopped payment altogether.
Household Life argued that they could stop the mortgage payments due to a “critical period” clause in the policy which limits the number of payments that can be made due to one disability. However, the courts determined that since Household Life never disclosed this when the contract was signed, and even the certificate of insurance was ambiguous; it’s language, confusing. Household Life is now facing several lawsuits related to their “critical period” exclusion.
This, by and large, is the type of bad faith practice for which insurance companies can be held liable.
A Bad Faith Insurance Practices Lawyer Can Help
Most folks are blindsided when they file a claim on an insurance policy only to have it come back denied. But you don’t have to fight the insurance company alone. A bad faith insurance denial lawyer can help you prove that the insurance company acted in bad faith when they offered the policy.
Examples of bad faith insurance practices include:
Using ambiguous language to mislead a policyholder concerning policy exclusions or policy requirements
Unfairly denying a claim without conducting a full investigation
Needlessly delaying the process while their policyholder is in crisis to force them into a settlement
Offering policies to those who won’t qualify
When Jeffrey M. Feigenbaum and our attorneys handle your case, we will hold the insurance company accountable to the terms of their policy and if they denied your claim in bad faith, then we can recover damages, your attorney’s fees, and more.
We will go over the terms of the policy with a fine-tooth comb. Insurance companies do not like bad faith lawsuits making headlines. It damages their reputation with prospective customers.
We Protect People Who Are Victimized by Unfair Practices of Banks and Credit Card Companies
Banks and credit card companies use a variety of bad faith insurance practices to deny credit disability insurance claims. For example, they delay or deny payment for no good reason or pay you less than you are entitled to under your policy. Our law firm is well versed in the tactics banks and credit card companies use to wrongfully deny our clients the coverage they paid for. If your claim for credit disability insurance has been denied, talk to a Credit disability insurance claim denied lawyer to learn your options. It is worth your effort to look into it. We handle claims involving companies such as:
Bank of America
Stonebridge Life Insurance Company
National Union Fire Insurance Company of Pittsburgh
Contact Our Credit Disability Insurance Claim Denied Attorney
We offer free initial consultations. For experienced representation regarding your credit disability insurance claim, call us at 617-357-9700 or toll-free at 866-396-9722 or contact us online.