Purchasing a life insurance policy is for most people an attempt to cushion their family against the financial devastation the death of loved one can cause. But what happens when life insurance companies deny a claim and refuse to pay out on a valid life insurance policy? If the beneficiaries of the life insurance policy do not have the help of an experienced life insurance claim attorney, the denial of a life insurance claim could cause chaos.
Common Reasons For Life Insurance Claim Denial
The first step to understanding why you are experiencing a life insurance claim denial is to understand how life insurance companies make their money. Life insurance companies survive because they receive more premium payments than they pay out in claims. This is why they carefully examine any life insurance claim for material misrepresentations.
Material misrepresentation is when the policyholder misstated or omitted important facts when they applied for their life insurance policy. Below are examples of material misrepresentation on an insurance policy:
- The policyholder said they were a non-smoker when in fact they smoked at least a few times a week. Even if the death of the policyholder had nothing to do with smoking, beneficiaries could still suffer an insurance claim denial.
- The policyholder lied about their employment history or income. Once again, even if their death was not employment related, the beneficiaries may still face an insurance claim denial.
- The policyholder engaged in some type of risky sport or hobby but failed to disclose it when applying for their insurance policy. This can definitely result in an insurance claim denial if the policyholder died engaged in a risky sport or hobby even if it was their first time engaging in the activity.
When an insurance company denies a claim based on material misrepresentation, they can only do so legitimately if disclosure of the omitted information would have impacted their decision to issue the life insurance policy. Unfortunately, illegitimate claim denial tactics are surprisingly common and many insurance claim denials are based on omissions which are petty or irrelevant.
We know how frustrating a denied life insurance claim can be. But we also know how to handle these cases, taking on the insurance company, making them account for their delays and dishonest business practices, and getting you the full amount your family deserves. If your life insurance claim has been denied or delayed, talk to a life insurance lawyer free to see if you have a case.