Many people purchase life insurance as part of their financial planning to ensure their loved ones will have financial security in the event of their death. Life insurance policies guarantee that a beneficiary will receive the proceeds after the insured’s death. Generally, life insurance benefits are paid faster than other assets, as life insurance is a non-probate asset. When proper claim settlement practices are followed, a life insurance payout should be made within 1-2 months after the insured's passing.
However, many beneficiaries face long waits, sometimes months or even years, to receive their life insurance benefits. This delay often occurs because the insurance company drags its feet in processing the claim. This prolonged delay can cause serious financial strain, particularly for families who relied on the insured as the primary breadwinner. Unfortunately, the emotionally difficult time of grieving a loved one is compounded by the frustration of dealing with a delayed claim. Insurance companies often use various tactics to delay the payment of claims.
Common Delay Tactics Used by Insurance Companies
1. Beneficiary Disputes
When two or more competing claims are filed for the same life insurance proceeds, the insurer may delay payment indefinitely. In such situations, it is crucial to be represented by counsel. An attorney can negotiate on your behalf and ensure you receive the full amount you are entitled to under the policy. Without legal representation, you may be pressured into accepting a smaller settlement, waiving your right to further pursue the claim. Before accepting any offers, speak with an experienced life insurance lawyer to ensure you are not taken advantage of.
2. Contestability Period
If the policy was purchased less than two years before the insured’s death, it falls within the contestability period. During this time, the insurance company has the right to contest the policy by reviewing the insured’s medical records. If the insurer finds that the insured made a material misrepresentation on the application, they may rescind the policy. The delay can last for months or even years during the review process. However, state laws generally require the insurer to complete the review in 60 days. Any delay beyond this is likely to be considered a wrongful, unreasonable delay.
3. Incorrect Documentation
When filing a claim, beneficiaries must submit specific documents. If an insurer claims that the documentation is incorrect or incomplete, this can delay the claim further. If you encounter such a situation, it’s important to consult with a life insurance lawyer to ensure your claim is processed appropriately.
4. Improper Authorization
When an individual applies for life insurance, they sign an authorization allowing the insurance company to request their medical records. If the insurer claims that proper authorization is missing and uses this as an excuse to delay the claim, this is likely a tactic to stall payment. Seek legal counsel immediately to address any issues with authorization and avoid further delays.
5. Fraud Investigation
In some cases, insurers may accuse the insured of fraud in procuring the policy, leading to a delay in paying out the claim. These accusations are serious and should not be taken lightly. If your claim is delayed due to suspected fraud, it is essential to seek representation from an experienced attorney who can help protect your rights and ensure the insurer is held accountable.
We Can Help You Fight Delayed or Denied Life Insurance Claims
At our firm, we are dedicated to assisting clients in fighting delayed and denied life insurance claims. If your claim has been unfairly delayed for more than 30 days, don’t hesitate to contact us. We offer contingency-based fees, meaning you only pay legal fees if we recover compensation for you. Our experienced life insurance attorneys will work to ensure you get the payment you deserve without further delay.