Life insurance companies are often quick to deny claims when the decedent’s medical history includes any form of mental health condition, including mild depression or anxiety. While these conditions are sometimes classified as minor, insurers frequently categorize them as risk factors, assuming that those who suffer from depression may be more likely to commit suicide. As a result, policies may be canceled, or claims denied, despite the fact that mild forms of depression are far less severe than conditions like schizophrenia or psychosis.
For many individuals who have been denied life insurance, the reason can stem from a clause that deems suicide as an exclusion from policy payouts, particularly if the person had previously disclosed mental health issues on their life insurance application. Unfortunately, when a death occurs, and the cause of death is not immediately clear, insurance companies may deny the claim, asserting that the death resulted from suicide rather than an accident or natural causes. Even if the cause of death was not suicide, insurance companies can still use the decedent’s mental health history to argue that they were at greater risk.
Such denials can be devastating, especially if the family had been relying on the life insurance payout to cover funeral expenses and ongoing financial needs. Families often feel lost and frustrated, especially when the cause of death doesn’t appear to warrant a claim denial. For instance, insurance companies might claim suicide if the decedent’s health history includes any record of depression, even if the death was due to an unrelated cause, like an accident or natural illness.
Why Do Life Insurance Companies Deny Claims for Depression?
There are several reasons insurers might use depression as an excuse to deny life insurance claims. These include:
Suicide Clauses: Many life insurance policies have clauses that exclude coverage for suicides, particularly within the first two years of the policy. This is a standard clause that many policyholders are unaware of when they purchase life insurance. If the insurer can find evidence that the decedent suffered from depression or mental health issues, they may try to claim that the death was self-inflicted.
Pre-Existing Conditions: If a person’s mental health history is disclosed on their policy application, insurers may use it as grounds to claim that the individual was a "high-risk" applicant. This can lead to the denial of claims if the insured dies unexpectedly, as insurers may argue that their mental health history played a role in the death.
Risk Assessment: Even when depression is mild, insurers may argue that the individual was at a higher risk for an untimely death. Life insurance companies tend to assess risk based on factors that are beyond the applicant’s control, like mental health. In some cases, insurers will deny claims because of their perceived risk of future claims resulting from depression-related issues.
What You Can Do if Your Claim is Denied
If your life insurance claim is denied because of depression or any other pre-existing mental health condition, don't give up hope. While life insurance companies are often difficult to fight, an experienced life insurance attorney can help you appeal the decision. Attorneys specializing in denied life insurance claims can challenge the insurer's ruling and help you obtain the benefits you are entitled to.
Appeal the Denial: The first step is to request a formal appeal, where you can provide evidence that the death was not a result of suicide or any mental health condition. This may include medical records that confirm the cause of death was accidental or natural.
Legal Action: If the appeal is unsuccessful, the next step is to consider legal action. In some cases, life insurance companies may refuse to honor claims despite having no valid reason. An attorney can help you file a lawsuit to get the benefits you are entitled to.
Consult an Attorney: Life insurance companies are typically very skilled at denying claims based on vague reasons, but experienced attorneys know how to navigate the complex language of insurance policies. Many attorneys offer free consultations to discuss the merits of your case and determine the best course of action.
The Impact of Denied Claims
Dealing with a denied life insurance claim is emotionally draining, especially when the reason for denial seems unjustified. Losing a loved one is hard enough, but then having to fight an insurance company over financial benefits can add to the stress and financial burden. Denied claims can also exacerbate grief, leaving families feeling betrayed by an institution they trusted to provide financial support in their time of need.
While insurance companies often use clauses, technicalities, or mental health histories as excuses for denying claims, it’s important to remember that insurers are obligated to honor their contracts. If you believe your loved one's life insurance claim was wrongly denied, you don’t have to face the fight alone.
Sources:
National Association of Insurance Commissioners. "Suicide and Life Insurance Claims." NAIC.
Insurance Information Institute. "Life Insurance and Exclusions." III.
American Bar Association. "Handling Denied Life Insurance Claims." ABA Journal.