When filing a life insurance claim, the expected outcome is the receipt of a payout of the value of the life insurance policy. Unfortunately, it is not uncommon for beneficiaries to be provided with the less favorable news that their claim has instead been denied or delayed. While such news can be very disheartening, beneficiaries receiving such news should find solace in the fact that this does not have to be the final resolution to a particular life insurance claim. Understanding the differences in the various claim outcomes, as well as legal options for each, will go a long way towards resolving troubling news.
The first scenario, an approved claim, is obviously the ideal outcome. In this situation, a beneficiary will have filed a claim against an insurance policy, and the policy provider will inform the beneficiary of an expected payout and the terms of such payout. In this scenario, where everything goes smoothly, the beneficiary can focus on other matters now that the financial stresses involved with ones passing are now out of the way.
The worst case scenario occurs when a beneficiary is informed that their claim has been denied. Many of our readers will notice that our past blogs cover the topic of denied life insurance claims. For any new readers, a denied claim simply means that the insurance provider is taking the position that they are justified in not paying out on a policy due to some contractual reasoning. Some examples of justifications for denying a claim are material misrepresentations, failure to pay premiums in a timely fashion, or issues with the cause of death. In this scenario, the denied claimant will have to decide whether or not to fight the insurance provider through one of many legal avenues. Essentially, the insurance provider has place the ball in your court and wants you to prove that you really do deserve the payout. Insurance providers are motivated to keep money in their pockets, so it is not uncommon for a provider to deny a claim if any loophole is spotted.
The last scenario we will discuss is the situation where a claim is delayed. While this situation is slightly better than an outright denial, it is still not the response the average beneficiary desires to hear. When an insurance provider informs a claimant of a delay, it can often be attributed to the fact that the provider needs to investigate the matter more. This may be due to incomplete information regarding cause of death, weak records on the policy or simply a tactic by the provider to draw the process out. Some providers will sadly use this tactic in hopes that a beneficiary will simply give up on the matter and they will not be forced to pay out. If you have been informed a delayed claim, understand that this means that there is still potential to be paid out in the future. Explore your options by contacting the provider for information on the delay and contact an attorney to see if they can help expedite the process.
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