Denied or Delayed Life Insurance Claims? Here's What You Need to Know
You might assume that after years of faithfully paying your life insurance premiums, your loved ones will receive the benefits without issue. Unfortunately, that’s not always the case. Denied and delayed life insurance claims are more common than most people realize. And when insurance companies fail to uphold their end of the agreement, beneficiaries are often left confused, stressed, and unsure of what to do next.
If you're currently facing a delayed or denied life insurance claim, you are not alone—and you don't have to face it without help. Here’s what causes these issues, what to watch for, and how a life insurance attorney can protect your rights and help you recover what’s rightfully yours.
Why Are Life Insurance Claims Denied or Delayed?
Insurance companies are, at their core, businesses—and like all businesses, they aim to maximize profits. That means minimizing payouts when possible. Sometimes, this leads to unfair practices, including:
Allegations of misrepresentation on the application
Lapsed policies due to missed payments (even if unintentional)
Disputes about the cause of death
Policy exclusions being used as loopholes
Delays in processing due to vague “investigations”
Regardless of the reason, the result is the same: a grieving beneficiary is left without the financial support that was promised.
Tips for handling the denied life insurance claim
Below are essential tips to help you navigate a life insurance claim denial and increase your chances of success.
1. Review the Denial Letter Carefully
When your life insurance claim is denied, the first step is to review the denial letter carefully. Insurance companies are required to provide a clear explanation for why the claim was denied, and this information is crucial for understanding the next steps. Common reasons for denials include missed premium payments, errors on the application, or issues with the policy's contestability period. By fully understanding the reason for the denial, you can determine whether it’s valid or if there are grounds for appeal.
2. Check for Errors in the Application or Policy
A common reason for life insurance claim denials is errors or discrepancies in the application or the policy itself. For instance, if the insured person failed to disclose important medical history or misstated certain facts, the insurer may attempt to void the policy under the "contestability clause." In such cases, review the application and policy documents to ensure there are no mistakes. If an error was made, you may be able to correct it through a policy amendment or appeal.
3. Understand the Contestability Period
The contestability period is typically a two-year window after the policy is issued, during which the insurer can investigate and deny claims based on material misstatements or omissions. If your claim is denied within this period, the insurance company may argue that the policyholder lied on their application or failed to disclose relevant information. However, if you’re outside the contestability period, the insurer has less authority to deny the claim based on these grounds.
4. Gather Supporting Documentation
If you intend to dispute the denial, it’s important to gather all relevant documentation to support your case. This may include medical records, proof of premium payments, witness statements, and any other documents that can substantiate your claim. For example, if your claim was denied due to alleged misstatements about the policyholder’s health, providing medical records from the policyholder’s doctor can help demonstrate their health status at the time of application.
5. Appeal the Denial
Most insurance companies allow policyholders or beneficiaries to appeal a claim denial. If you believe the denial was unjust, it’s important to submit a formal appeal. In your appeal, clearly explain why you believe the denial is incorrect, reference any supporting documentation, and provide any new evidence that may have been overlooked. Keep track of all communication with the insurer and ensure that you follow their specific process for appeals.
6. Consider Filing a Complaint with the Insurance Regulator
If you’ve appealed the denial and the insurance company still refuses to pay the claim, consider filing a complaint with your state’s insurance regulator. Each state has an insurance commissioner or department that oversees insurance companies and enforces regulations. They can investigate the insurer’s actions and potentially resolve the dispute without the need for a lawsuit.
7. Consult with a Life Insurance Attorney
Handling a life insurance claim denial can be a complex and frustrating process, especially when significant amounts of money are at stake. If the insurer continues to deny your claim or if you’re struggling to understand the denial reasons, consulting with an experienced life insurance lawyer can be extremely beneficial. A lawyer can help you assess the validity of the denial, guide you through the appeals process, and represent you in court if necessary.
8. Know Your Rights Under ERISA
If the policy is provided through an employer, it may be governed by the Employee Retirement Income Security Act (ERISA). ERISA sets specific rules and time frames for claims and appeals, which differ from state law. Understanding ERISA’s protections is essential, as it may provide additional rights for challenging a life insurance claim denial. Consult with an attorney who specializes in ERISA if your policy falls under this law.
9. Explore Alternative Dispute Resolution (ADR)
In some cases, insurers and beneficiaries can avoid lengthy litigation by using alternative dispute resolution (ADR) methods, such as mediation or arbitration. ADR can offer a faster, less costly resolution to a dispute and can be a viable option if you want to avoid going to court. Consider discussing this option with your attorney if you're open to a less formal process.
10. Document Everything
Throughout the process of appealing a life insurance claim denial, it’s crucial to document everything. Keep copies of all correspondence with the insurer, including emails, letters, and phone call notes. This documentation can serve as valuable evidence if you need to take legal action or escalate the matter.
11. Don’t Give Up Too Soon
Life insurance claim denials can be discouraging, but it’s important to persist. Insurance companies may deny claims initially in the hopes that the beneficiaries will give up. However, many legitimate claims are overturned after a thorough review and appeal process. Don’t be afraid to challenge the denial and take the necessary steps to fight for the benefits you’re entitled to.
Final Thoughts: Take Action When Your Claim Is Denied
Life insurance claim denials can be overwhelming, but understanding your rights and following the proper steps can help you successfully dispute the decision. Whether through appeals, legal action, or working with an experienced attorney, you don’t have to accept a denial without a fight. By following these tips and seeking professional legal assistance when needed, you can increase your chances of receiving the life insurance benefits you deserve.
If you need help with a denied claim or have any questions about your rights, contact our team of experienced life insurance attorneys today. We are here to guide you through the process and help you secure the benefits you are entitled to.
If you're facing a delay or denial, don’t wait. The sooner you involve an experienced life insurance lawyer, the better your chances of recovering the benefits your loved one intended for you.
The NAIC notes that insurers must provide clear written explanations for denials, and beneficiaries have the right to appeal. According to the Insurance Information Institute, common denial reasons include missed premium payments or the insured passing away during a contestability period. For group policies, the U.S. Department of Labor outlines additional protections and appeal rights under ERISA.