When it comes to life insurance, many people think that life insurance companies exist to help them out during a difficult time. In truth, life insurance companies exist to make profits. Like other companies, they have to answer to shareholders who expect them to bring in the greatest amount of dollars year after year.
The best way for a life insurance company to keep shareholders happy is to collect the maximum amount of premiums while denying the maximum number of claims. In the best case scenario, a life insurance company would collect monthly or annual premiums from a policyholder for years on end only to deny a claim from that policyholder’s beneficiary at the time of death. Knowing that this is a winning business model, life insurers go to great lengths to come up with reasons to deny legitimate claims.
As lawyers who specialize in the wrongful denial of life insurance claims, we've seen just about every excuse in the book for denying death benefit payouts. Over the years, however, we’ve seen some excuses have been used more than others. This article explores one of the most common reasons we’ve seen life insurers use to deny or delay policy payouts – the purported failure of the beneficiary to submit all required paperwork with their insurance claim.
Specifically, we’ll explain the types of documents that might need to be submitted along with a life insurance claim. We’ll also look at how insurers use those documents in making claim decisions.
Certified copy of the policyholder’s death certificate. Almost without exception, a life insurance company will require that the beneficiary submit a certified copy of the policy holder’s death certificate along with the claim form. The reason they do this is simple: before the insurance company will pay out tens or even hundreds of thousands of dollars, it needs to be sure the policyholder has actually died. Given that the certified copy of the death certificate is an official government document, it usually gives the life insurance company the security it needs to make that determination.
Toxicology report. If they policyholder dies within the first two years after the policy is issued, the insurance company typically has a right to undertake a full investigation into the circumstances of the policyholder’s death. That is because most policies contain what is known as a “period of contestability.” During that two year period, the insurance company is allowed to make sure that the policyholder did not die in a manner that would exclude it from having to make a payment under the policy.
One of the most common exclusions in modern life insurance policies is known as the drug exclusion. Basically, a drug exclusion relieves the insurance company from having to pay a death claim if the insured died while under the influence of any sort of illegal substance.
If the insured dies during the period of contestability, the life insurer has the right to determine if that person was under the influence of drugs when they died and, if so, whether the company can invoke the drug exclusion. A toxicology report will give them that information.
Note, however, that after the period of contestability ends, the drug exclusion should have no force and effect. Consequently, if an insurance company is delaying or denying a claim made more than two years after the policy issued while it purportedly waits for a toxicology report, the company is likely engaging in the wrongful delay and or denial of the claim.
Autopsy report. In many cases, the beneficiary is also required to submit an autopsy report along with the claim form. The reason for this is obvious. The insurance company wants to know precisely how the policyholder died. Again, the company is really looking for a reason to exclude coverage.
If, for example, an autopsy report reveals things like suicide, death during commission of a felony, or any other cause of death that might allow them to deny the claim, they’ll want to see that report. Of course, autopsies are not conducted every time a person dies. For example, if a person dies of cancer after a long fought battle, an autopsy may not even be ordered. Life insurance companies know this. Nonetheless, they often rely on the absence of an autopsy report as an excuse for delaying or denying a claim.
Coroner’s report. In most regions of the United States, any time a person dies in an unconventional manner, their death must be reported to the local coroner. This could include death by way of accident, homicide, suicide, or even deaths that occur on the job. If, following a preliminary inquiry, the corner determines that further investigation is needed, that investigation typically culminates in a report of findings. Not surprisingly, the life insurance company will want to see that report for the same reason discussed above – it wants to find a reason to deny paying the claim.
If the insurance policy at issue specifically asks for a coroner's report and if one was performed in your situation, it should be provided to the insurance company. Again, however, the absence of a coroner's report is typically not a sufficient reason for the insurer to delay or deny a claim.
Police report. Many life insurance policies contain exclusions that relieve the insurance company from paying a claim if the policyholder died during the commission of a crime. Consequently, the insurance company will want to see any police reports that resulted from the circumstances surrounding the insured's death. Note, however, that most deaths do not involve a police report. Insurance companies know this, but they will still use the absence of a police report to delay or deny a claim.
A final word of caution: a life insurance company cannot use the absence of any documentation as an excuse for delaying a decision on a claim indefinitely. Most state laws require that the insurer notify a beneficiary about any missing documents quickly. If you have any questions about the documentation your insurance company is requiring, please don't hesitate to call our firm. We’re here to help.