If you’re waiting for your life insurance benefits to arrive, you’re not alone. Many people will wait weeks or months after the death of a loved one, only to eventually be told that their claim is invalid. The truth is, life insurance companies will look for any possible reason to deny a claim—and if they can’t find one, they may give you a bogus excuse to hold onto your benefits.
Here are the five most common reasons life insurance companies deny claims (and why they aren’t true):
1. The policy was not “in force” at the time of death.
This is the most common type of life insurance benefit denial. If your loved one ever missed a payment, the insurance company can claim that your policy was not “in force” at the time of death—and therefore, they do not have to pay the amount of the claim.
Why it’s untrue: While coverage does depend on regular payment of premiums, the insurance provider is required to send a notice of cancellation and extend a minimum “grace period” before the policy is suspended. Even if it is a term life insurance policy, many companies are still obligated to offer a renewal before canceling.
2. Ambiguous policy language
Many people have never read their insurance policies all the way through—and even fewer actually understand them. Insurance companies will use this to their advantage, claiming that certain clause is grounds for denial, or that the date of coverage actually ended a month earlier, etc.
Why it’s untrue: As experienced life insurance claims attorneys, we can tell you that when the language in a contract is confusing, the benefit automatically goes to the policyholder. A good attorney should be familiar with policy language—and the tactics an insurance company will use to deny your claim.
3. The death occurred under “suspicious circumstances.”
Most insurance policies include suicide clauses. These state that if the policyholder takes his own life, no benefits will be paid. Disreputable insurers may cite this clause if the policyholder is suspected of euthanasia, or if one of the beneficiaries played a role in the policyholder’s death.
Why it’s untrue: Many people don’t realize that these denials can be contested by submitting a police report that outlines the cause of death. Also, most policies no longer consider doctor-assisted euthanasia to be “suicide.”
4. The policy was purchased less than two years ago.
When you purchase a life insurance policy, most insurance companies enforce a mandatory contestability period in the first two years of coverage. If the insured dies within this two-year period, the company will review his application and deny any claim if insured gave inaccurate information.
Why it’s untrue: In most denials, the information given may be inaccurate, but has no bearing on the cause of death, such as height or weight. Life insurance claims attorneys are familiar with this practice, also called material misrepresentation. As long as your relative did not commit material misrepresentation, insurance companies cannot refuse to pay your benefits after the two-year contestability period has passed.
5. Your loved one committed insurance fraud under state law.
There are some state laws that apply past the contestability period. Depending on where you live, your policy could be invalidated if your relative lied about his age, health history, or other important fact that would affect the amount of coverage.
Why it’s untrue: A life insurance settlement lawyer can examine a policy closely to determine whether your loved one has committed fraud. However,fraud does not necessarily guarantee non-payment of your claim. Many states must pay at least a portion of benefits if regular payments were made on the policy—even if the policyholder gave false information.
It is important to realize that even if all premiums were paid and no false statements were given, the majority of all life insurance claims will initially be denied. Still more will be delayed as long as possible, in the hopes that the relatives of the deceased will eventually give up the fight for the money that is rightfully theirs. In these cases, it is important to seek the advice of a board-certified DC life insurance attorney.
A life insurance claims lawyer can give you vital information on state-specific rules regarding your claim. For instance, many states have rules that if an insurance company is taking an unnecessarily long time to process your claim, the company is required to pay you interest on the weeks the money is withheld.
Life Insurance Law has a dedicated team of attorneys that get claims settled fast, no matter where our clients are located. We work with local lawyers in your state to get you the maximum settlement for your denied or delayed life insurance claim.
If you have questions for the attorneys at Life Insurance Law, we will be happy to provide all the information in your free consultation. Call us toll-free today to get your family the full life insurance benefits they deserve.