The death of a loved one is an emotionally overwhelming time, and dealing with life insurance claims can add to the stress. Unfortunately, thousands of life insurance claims are denied every year in the United States. While the process of filing a claim is often expected to be straightforward, there are several common mistakes that can lead to delayed or denied claims. Understanding these mistakes and having an experienced life insurance lawyer on your side can greatly increase your chances of a fair recovery.
1. Failure to Disclose Important Information
Honesty is crucial when filing a death benefits claim. Whether it’s the initial application for the life insurance policy or the claim itself, failing to disclose certain information can result in a claim denial. This could involve intentional omissions, misrepresentations, or outright falsification. While accidental errors (like writing the wrong driver’s license number) should not affect the claim, intentional omissions can lead to serious complications.
2. The Cause of Death Isn't Covered
Not all deaths are automatically covered under a life insurance policy. Some policies exclude coverage for deaths resulting from certain activities, such as skydiving, or from circumstances like suicide within a certain time frame after the policy is issued. It's essential to thoroughly review your policy’s terms and conditions to ensure that the cause of death is covered.
3. Contestability Period Issues
Many life insurance policies include a contestability period, which usually lasts around two years from the date the policy was issued. During this time, if the policyholder passes away, the insurance company can investigate the application to ensure there was no fraud or misrepresentation. If the insurer finds discrepancies in the application or other issues, it can delay or even deny the claim.
4. The Life Insurance Policy Lapsed
A life insurance policy that has lapsed is another common reason for claim denial. If premiums were not paid, or if there was a lapse in coverage for any reason, the insurer may deny the claim. Setting up automatic payments can help prevent accidental lapses. Some companies also offer grace periods, but it's important to check the terms to ensure the policy is active at the time of the insured's death.
How to Avoid These Issues
While there are many factors that can lead to a claim denial, understanding the specifics of your policy and ensuring full disclosure on the application are crucial steps to avoiding problems later on. If your claim has been denied or delayed, don't hesitate to seek the help of an experienced life insurance attorney. Legal representation can help you appeal the denial and navigate the complexities of the claims process. An attorney will work on your behalf to ensure that you receive the benefits you are entitled to.