Life Insurance & Lawsuits
In the life insurance industry, parties, whether policyholders or their beneficiaries, can file lawsuits against life insurance companies. They may do so to seek legal remedies for damages they claim to have suffered from the actions of these companies. In such cases, those who file lawsuits are known as "plaintiffs," while the insurance agencies themselves are known as "defendants."
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History
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Litigation involving life insurance companies have been occurring for years. For instance, more than 30 life insurance companies have had to deal with lawsuits concerning duplicitous sales practices in the 1980s and 1990s. Prominent companies such as Prudential, CIGNA, Hancock and Met Life are just some of the life insurance agencies that have had to deal with these lawsuits. Not all of the courts involved in these lawsuits have found in favor of customers. A class action suit filed against Mutual Life Insurance Co. of New York was dismissed in October 2007.
Why lawsuits Are Filed
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Individual and class action lawsuits--in which a large group of people bring a single claim to court--have been filed for many reasons. For instance, beneficiaries of life insurance policies have filed lawsuits against life insurance companies when they have refused to allow them to claim policy proceeds upon policyholders' demise. Policyholders have also filed class-action lawsuits against life insurance companies for alleged deceptive or unscrupulous sales practices. "Secret" life insurance policies taken out by companies on employees without their knowledge or consent have also resulted in lawsuits being filed against these companies.
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Procedure of Litigation
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Life insurance-concerned litigation proceeds in much the same way as litigation in other industries. Lawsuits are initiated when complaints are filed with a court, which informs defendants of the suit via a summons. A pre-trial is then held to determine if the suit is really necessary, and to facilitate an initial exchange of evidence and statements based on what the plaintiffs and defendants wish to present during the trial. Should the suit be determined to be necessary, the actual trial is held, during which both sides present witnesses and evidence, and afterward a judge or jury hands down their decision. Appeals may be made after said decision is handed down.
Possible Outcomes
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A default judgment can be handed down should the life insurance company fail to appear in court, or a summary judgment imposed without a full trial depending on each case's considerations. There may also be sufficient grounds to dismiss the case for lack of merit. Many lawsuits are settled out of court and never proceed to a trial at all. Settlement can also be reached after a trial has begun. Life insurance companies may decide to settle by paying a certain amount of money to the defendant or defendants. In those lawsuits proceed to a trial, the judge or jury may find for either party depending on the strength of the arguments and the evidence supplied, as well as the caliber of the witnesses brought forth and their testimonies.
Timeframe
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Litigation concerning life insurance may take quite some time to be resolved satisfactorily--where, of course, litigation has proceeded to a full trial and has not been dismissed or settled out of court. This is because of the complex nature of many cases, most especially those in which federal laws may clash with state laws or state laws with laws of other states. In addition, if a suit has many plaintiffs, such as a class action suit, that can also add complications of its own.
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