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Why Can Life Insurance Claims Be Denied?

Life insurance is an excellent method of providing a safety cover for your family. The cash payout could be utilized to repay any debt (like student loans) or to pay for funeral expenses or even to provide an inheritance.

Life insurance is a great way to offer peace of mind you’ll be wondering how many life insurance claims are denied and leave the beneficiaries with nothing. It’s a horrible idea, but it’s not something to be concerned about. This is because a small percentage of people encounter a declined life insurance claim.

“Life insurers cover the majority of claims,” says Whit Cornman who is a spokeswoman for the American Council of Life Insurers (ACLI) which is an industry-related group. Cornman states there was less than 0.5 percent in claims (measured by face amount of the policy) had been in controversy as of the end of year 2019.

Although the chances of a life insurance claim being denied are low but you must still be aware of things that could cause a claim to be denied in undisputed territory.

Failure to divulge a medical condition or any other pertinent information

If you are applying for an insurance policy for life you must declare any medical conditions or other risk factors like dangerous hobbies (like Skydiving). If you don’t provide complete details during the process of applying your life insurance claim may be rejected in the future. This is because the living expectations (called mortality in the insurance industry) is the base to determine the class of life insurance underwriting. Medical conditions are a major factor which determine the rates.

Inability to disclose relevant details in the process of applying for life insurance is deemed to be to be a “material mistake.” This is an inaccurate or misleading assertion, or the inaccuracy of specific information. A material error can affect the insurer’s ability to offer exact rates. In certain instances, a false representation results in an application being accepted, but would otherwise be refused.

Here are a few examples of the information you must typically provide in an application for life insurance:

* Medical background. It includes the current medical issues and mental health issues prescription history and the family health history (parents and children).

* Risky hobbies. This includes activities such as mountain climbing, car racing and skydiving.

* Risky behaviors. This includes using tobacco, criminal record records and risky driving habits like DUI convictions and other traffic offenses.

* Risky occupations. Construction workers as well as active military personnel, police, firefighters, and pilots may be subject to higher rates for life insurance.

Life insurance policies come with what’s known as the “contestability period” that is usually two years in which the insurance company has the ability to contest or challenge an insurance claim. The two-year period starts with the date of issue on the insurance policy.

The insurer may request medical records or other documents in order to examine the existence of any significant misrepresentation in your life insurance claim.

If your insurance company finds any evidence of materially false representation, the policy may be cancelled and your beneficiary won’t be eligible for the death benefit.

It is important to note that insurance companies have a variety of methods to confirm the information you supply when filling out an application.

Life Insurance Premiums were Not Reimbursed

In some instances, your beneficiaries might attempt to claim, but they don’t realize that you haven’t paid your premiums prior to your the date of death.

If you’re in debt on your life insurance premiums it is possible to get your life insurance payments back on track according to how much ahead you’re. The majority of life insurance policies offer 30 or 31 days of grace period following that date. You are able to make the amount without having to pay interest. If you die during your grace time, the beneficiary will still receive this death reward, less the past due premium.

If your policy has expired because of non-payment, you might be able to reinstate the life insurance policy that was lapsed by paying the past due premium plus interest. The requirements for reinstating the policy can differ based on the state and company. For instance In Texas life insurance, the majority of companies will allow you to reinstate the policy after a 5-year period, but you will need to answer additional health questions or undergo a new medical exam for your life insurance.

In the event of a term life insurance policy

If you’re a holder of the term insurance for life, it may possibly outlive the policy’s duration which means there will not be a death benefit payout.

If you’re in need of a greater amount of protection, your policy may permit renewal (at an increased cost) after you reach the end of your time. It is also possible to change a term life insurance policy to a life insurance policy with a certain time that you can do it. Be aware of the policy’s expiration date if looking to convert it.

A Suicide Death

Life insurance policies typically include a “suicide clause” typically lasting for two years. If a suicide happens within this period the insurance company typically will not make a payment. Instead, it will reimburse any premiums paid to the person who was insured.

Making an Life Insurance Claim

In order to ensure a smooth claim process, it’s crucial to inform your beneficiaries the location where the life insurance coverage is According to Cornman of the ACLI.

The policy should be kept along with other documents related to finances, legal documents or wherever your beneficiaries could check if they have to submit claims. Cornman suggests that you keep the name of your life insurance agent and contact information readily accessible.

If you’re a beneficiary, this is how to file an insurance claim.

When a life insurance claim gets not approved the beneficiaries must request an official denial of claim in writing. If they decide to contest this decision they must have the documents and other information that will support the claim. If they are unable to resolve the issue with the insurance company and the state department of insurance, they can seek out the state’s department of insurance for more advice.