Unfortunately, there are countless reasons why a life insurance claim could be denied or delayed, each adding a layer of frustration and confusion for beneficiaries. While some causes are straightforward, such as failing to submit proper documentation or making a minor mistake on the claims form, one of the more complex—and frequently cited—reasons for a denied claim is an accidental lapse in coverage. This occurs when the insured fails to make timely premium payments, causing the policy to become inactive, even if the lapse was unintentional.
Understanding the reasons behind life insurance lapses and claim denials will better equip you to protect your rights and appeal if you find yourself facing a denial due to this reason. Below, we dive deeper into the criteria for approving a death benefits claim, the causes of policy lapses, and what to do when faced with a claim denial.
Criteria to Approve a Death Benefits Claim
When submitting a death benefits claim, several essential criteria must be met for the insurance company to approve and pay out the claim. To start, the life insurance policy must have been active at the time of the insured's death. If the policy had lapsed due to unpaid premiums or other issues, the claim could be denied.
In addition to the policy’s validity, the beneficiary must submit all necessary documentation. This includes the death certificate, or a certified copy of it, to prove the death occurred and is eligible for a payout. The insurer will also thoroughly review the claim to ensure no exclusions apply to the policy. Some policies contain clauses that could prevent a payout under certain circumstances, such as the "suicide clause" which might exclude coverage if the insured took their own life within a specified time frame.
What Causes a Life Insurance Policy to Lapse?
A life insurance policy will typically lapse only if the policyholder fails to make premium payments within the required time. However, most life insurance companies offer a grace period, which usually lasts between 30 days and two months. During this period, if the premium payment is made, the policy remains in force.
The problem arises when the policyholder does not pay the premium after the grace period has passed. If the insured passes away while the policy is lapsed, the beneficiaries may find themselves facing a claim denial, even if the lapse was an honest mistake or accidental oversight. Unfortunately, this is a common reason life insurance companies deny claims, leaving beneficiaries in a difficult position during an already emotional time.
Steps to Take Following a Claim Denial Due to Lapse
If you've received a notice that your death benefits claim has been denied due to a supposed lapse in coverage, the first thing you should do is contact a life insurance attorney. In some cases, the insurance company may be mistaken, or worse, they could be attempting to wrongfully deny your claim. Life insurance companies often make errors in policy administration, and it's not uncommon for them to claim a policy lapsed when it was still active or when premiums were paid within the grace period.
Regardless of whether the lapse was a simple mistake or a deliberate attempt by the insurer to deny your claim, the most important thing to remember is that claim denials can be appealed. However, this process is not something you should attempt alone. Navigating the appeals process can be complex and time-consuming, and a legal expert can help you maximize your chances of success.
A skilled life insurance attorney will investigate the details of your case, collect necessary documentation, and prepare a strong appeal. This often involves submitting a comprehensive brief, sometimes spanning 100-200 pages, that includes applicable case law, policy details, and evidence to challenge the denial.
Facing a death benefits claim denial can feel overwhelming, especially during such a difficult time. However, you don’t have to accept the initial decision as final. With the guidance of an experienced life insurance attorney, you can fight back against a wrongful denial and ensure your claim is properly reviewed.
Consult with an Experienced Life Insurance Attorney Today
If you’re dealing with a denied life insurance claim due to a lapse in coverage, don’t hesitate to reach out to a life insurance attorney. With over 15 years of experience, a knowledgeable lawyer can assess your case, identify errors in the insurer’s decision, and guide you through the appeals process. We are here to help you get the death benefits your loved one intended for you, and we are committed to standing up for your rights.