Why Your Life Insurance Claim Was Denied and How to Appeal
Losing a loved one is one of the most emotionally challenging experiences anyone can face. Unfortunately, what makes this situation even more difficult for many families is discovering that the life insurance claim they relied on for financial support has been denied or delayed. Life insurance is purchased to ensure loved ones are financially protected in the event of an untimely death, covering expenses like mortgages, college tuition, funeral costs, and more. But when a claim is unfairly denied, it can add significant financial and emotional burdens to an already difficult situation.
Many beneficiaries mistakenly believe that once a claim is denied, there's nothing they can do but accept it. However, this is not true. Denials and delays can—and should—be appealed, and many denials are overturned as a result of a thorough and effective appeal.
Common Life Insurance Claim Denial Reasons
Life insurance companies issue claim denials for a variety of reasons. Understanding why a claim may have been denied is the first step in determining whether the decision was valid and whether there is a path forward for appeal. Here are some of the most common reasons why life insurance claims are denied:
Failure to Pay Premiums One of the most common reasons for a life insurance claim denial is the failure to pay premiums. If premiums are not paid on time or within the company's grace period (if offered), the policy can lapse. If the insured passes away after the policy has lapsed, the insurance company is within its rights to deny the claim.
Misrepresentation or Omission on the Application Life insurance policies typically have a "contestability period," usually the first two years after the policy is issued, during which the insurance company can investigate and deny a claim based on discrepancies or omissions in the original application. For instance, if the insured stated they were a non-smoker but were later found to be a smoker, the claim may be denied based on this misrepresentation.
Policy Exclusions Many policies have exclusions that can lead to claim denials. For example, if the insured passed away due to a cause that is explicitly excluded in the policy, such as death from a self-inflicted injury or a specific health condition, the claim may be denied.
Alcohol and Drug Use Some policies have clauses that deny claims if the insured was under the influence of alcohol or drugs at the time of death. If an insured’s death is ruled to be related to intoxication, this can be a reason for claim denial.
Suicide or Accidental Death Policies typically include a suicide clause, which states that if the insured dies by suicide within a certain period (usually two years), the claim can be denied. Similarly, accidental deaths may have specific exclusions or conditions for payout.
Death in a Foreign Country If the insured passes away while traveling or living abroad, some policies exclude death benefits if the cause of death is related to the insured's location or activities in a foreign country.
Is the Denial Valid?
When you receive a life insurance claim denial, the first question to ask is: What was the reason for the denial, and is that reason valid? Many life insurance companies rely on the fact that beneficiaries won’t challenge the decision. In fact, most claim denials are based on incorrect assumptions or misunderstandings of the policy terms.
If your claim was denied, you may be surprised to learn that it could have been an error, and there are likely options for appeal. Life insurance companies are in business to make money, and denying claims is often part of their strategy. Therefore, it's important to review the reasons for denial thoroughly and consider seeking legal help to contest the decision.
Why You Should Retain a Life Insurance Attorney
Life insurance companies may not have your best interests at heart. Their goal is to minimize payouts and maximize profits for their shareholders. Unfortunately, fighting a claim denial on your own is difficult, especially without knowledge of the specific laws and regulations governing life insurance policies.
The best course of action after a claim denial is to consult with an experienced life insurance attorney who can help guide you through the appeal process. A qualified attorney will have the expertise needed to review your case and determine whether the denial was justified. They will be able to identify any missteps by the insurance company and work to overturn the denial.
Our life insurance attorneys have handled thousands of cases and have a high success rate in overturning claim denials. In fact, we submit a comprehensive 100-200-page legal brief when appealing claims, and our success rate is nearly perfect. We know how to navigate the complexities of ERISA, which governs work-related life insurance policies. With ERISA claims, beneficiaries only have one opportunity to appeal the decision, so it’s crucial that the appeal is handled correctly the first time.
How Our Life Insurance Lawyers Can Help
If your life insurance claim was denied, don’t accept the insurance company’s decision without exploring your options. Our team of experienced life insurance attorneys can help you understand your rights, review the specifics of your case, and take the necessary steps to appeal the denial.
We handle claims with all major insurers, including American Fidelity, American Income Life, AIG, Aviva Life, CIGNA, Colonial Life, Foresters, Genworth, Gerber Life, Globe Life, Great American Life, Hartford Life, Liberty National, Lincoln Heritage, Lincoln National, Metropolitan Life, New York Life, Northwestern Mutual, Reliance Standard, Standard Life, Stonebridge, Transamerica, and more.
Don't let a denied life insurance claim add unnecessary stress to an already difficult time. Consult with an experienced life insurance lawyer today to ensure that your loved one’s death benefits are paid out as intended.