How Omissions and Exclusions in Life Insurance Applications Can Lead to Claim Denials
When applying for a life insurance policy, providing accurate and complete information is crucial. Life insurance companies base their underwriting decisions on the details provided in the application, and omitting important information can lead to the denial of a claim. Here’s why omissions and exclusions in your life insurance application can have serious consequences:
Why Omissions and Exclusions Matter in Life Insurance Applications
Underwriting Assessment: Life insurance companies assess the risk of insuring an individual by evaluating various factors such as age, health status, lifestyle choices, and family medical history. Omitting information about these factors can misrepresent your risk profile, resulting in incorrect premium rates or even approval for a policy that you may not be eligible for. For example, if you fail to disclose a pre-existing medical condition, it can cause significant issues if the condition is discovered after your death.
Material Misrepresentation: Insurance companies consider certain information to be material—that is, it directly affects the decision to approve or deny coverage, or to set premium rates. Leaving out important details, such as a risky occupation or pre-existing health conditions, can lead to a claim denial. Whether the omission was intentional or accidental, material misrepresentation can result in the insurance company voiding the policy or refusing to pay out the death benefits.
Exclusions and Limitations: Many life insurance policies include specific exclusions or limitations that outline scenarios where the policy will not provide coverage. For example, activities such as extreme sports or high-risk hobbies (skydiving, scuba diving, etc.) may be excluded. Failing to disclose participation in these activities can lead to a denial of the life insurance claim if the insurer determines that the death falls under one of these excluded circumstances.
Common Omissions and Exclusions Leading to Denials
Here are some examples of omissions or exclusions that can lead to a denied claim:
Tobacco or Drug Use: If you fail to disclose tobacco or drug use, it could affect both your eligibility for coverage and the premium rates you are charged. Non-disclosure of such habits can result in a denied claim if discovered after death.
Pre-existing Medical Conditions: If you don’t disclose a history of medical conditions or ongoing treatment, the insurer may deny the claim if they discover these conditions later, particularly if they were not disclosed at the time of application.
Participation in High-Risk Activities: Failing to disclose participation in hazardous activities like extreme sports, scuba diving, or skydiving could lead to a claim denial if the cause of death is related to these activities and they were excluded from coverage.
Family Medical History: If your family has a history of hereditary diseases that could impact the underwriting decision, failing to disclose this information could affect your policy and lead to a claim denial.
Financial History: Omitting information about bankruptcies or legal issues may affect the life insurance company’s assessment of your financial stability. Such omissions could also lead to a claim denial.
How to Avoid Life Insurance Claim Denials
To avoid the risk of denied claims, always provide complete and accurate information when applying for life insurance. Here are some tips:
Be honest about your health history, including pre-existing conditions or ongoing treatments.
Disclose any lifestyle factors that might impact your premiums or eligibility, such as smoking, drinking, or risky hobbies.
Don’t forget to include information about your family’s medical history, particularly hereditary conditions that might affect your health.
Keep your insurer updated if there are any changes to your health or lifestyle, even after your application has been submitted.
If you have concerns about what information to include on your life insurance application or questions about specific exclusions, it’s a good idea to consult with an experienced life insurance agent or attorney. They can help ensure that you don’t inadvertently leave out critical information that could affect your coverage or future claims.
What to Do If Your Life Insurance Claim Is Denied
If your claim is denied due to an omission or exclusion, you may still have options. Consulting with an experienced life insurance attorney is essential to determine whether the denial was justified or if you can contest the decision. Many life insurance claim denials can be challenged, especially if the insurer relied on an insignificant omission or if you can prove that the misrepresentation was not material.
Our legal team specializes in helping people contest denied life insurance claims. If you are dealing with a denied claim, reach out for a free consultation and let us help you navigate the appeals process.