Understanding an insurance policy shouldn't require a law degree, but for many, it does. Life insurance contracts are often written in dense, complicated language that can make it difficult for the average person to understand their rights, coverage, and the claims process. While this could simply be the result of legal professionals being overly accustomed to jargon, it’s hard to ignore the possibility that insurance companies intentionally use these complex terms to confuse policyholders and deter them from filing claims.
Why Are Life Insurance Contracts So Complex?
While some contracts may be unintentionally hard to read, a closer look at the insurance industry's practices suggests that complexity is advantageous to the insurer. Over half of U.S. states have enacted “Plain English” laws to force insurers to simplify their contracts so that they can be easily understood by consumers. However, despite these laws, many life insurance contracts remain dense and full of technical language. The reason? It’s easier for insurance companies to hide behind confusing terms, and the more complicated the policy, the more difficult it is for policyholders to determine if they have valid claims.
Imagine trying to make a claim when you need a dictionary to understand key terms of your policy. This daunting process often leads many to abandon their claim altogether or accept lower payouts than they deserve. This scenario works in favor of insurance companies, as it helps them retain more profits.
The Business of Denying Claims
Insurance companies, particularly those focused primarily on profit, are often incentivized to find ways to deny or delay claims. It’s not about bad companies versus good companies; it’s about an industry-wide tendency to delay and deny claims in order to boost the company’s bottom line. One company might honor a claim today, only to unjustly deny one tomorrow. While there are definitely companies that are better than others, the temptation to cut corners in the claims process is a significant challenge for policyholders.
In the wake of the COVID-19 pandemic, many insurance companies found themselves dealing with an increased number of claims due to the high death toll. Some companies were caught handing out rewards like gift certificates to employees with low payout rates, while others were found to fire employees who refused to deny claims. Additionally, insurers may offer lowball settlements upfront, hoping that customers will accept less than what they are rightfully owed just to avoid a lengthy legal battle.
Fraud Prevention or Unfair Practices?
Some of these denial tactics are framed as efforts to combat fraudulent claims. The insurance industry often highlights the prevalence of "frivolous lawsuits" and false claims—such as fake slip-and-fall accidents—as a reason for these practices. However, studies show that legitimate claims and lawsuits significantly outweigh fraudulent ones. While the intention to combat fraud is understandable, the result is often the unfair treatment of policyholders who file valid, reasonable claims.
In addition, some CEOs may be more concerned with meeting profit goals and satisfying shareholders than with ensuring that policyholders receive the full benefits promised to them. This focus on profit over people has resulted in an industry where policyholders may struggle to get a fair payout, even when they are legally entitled to one.
How Can You Protect Yourself from Denied Claims?
Given this environment, it’s wise for policyholders to assume that their insurer may not have their best interests at heart. If you’re making a claim, it’s important to be proactive and vigilant in dealing with your insurance company. The moment you feel that your insurer is not being fair or transparent with you, it’s crucial to consult with a life insurance lawyer.
A skilled attorney can help ensure that your rights are protected and advocate for the benefits you are entitled to. They can also guide you through the complexities of the claims process, assist with policy interpretation, and fight back against any unfair denial tactics employed by the insurer.
At our firm, we have extensive experience in handling life insurance disputes. If you feel that your claim is being delayed or denied unfairly, don’t hesitate to contact us for a consultation. We work on a contingency fee basis, which means you only pay us if we successfully recover your insurance benefits.
Don’t Wait—Get Legal Help Now
The longer you wait to address a denied or delayed claim, the more difficult it may become to recover the benefits you deserve. Whether the insurance company is using complicated language to confuse you or employing delay tactics, consulting with an attorney early can make all the difference. Let us help you navigate the claims process and ensure that you receive the compensation you are entitled to.