Our life insurance attorneys just resolved a $1,300,000.00 Lincoln Financial life insurance claim. To understand denials...in exchange for monthly premium payments, insurance companies provide financial support to the beneficiaries in the event of the policyholder's death. Even though life insurance claims are easy to file and receive, sometimes insurance companies can deny or delay them.
Several factors can lead to denied life insurance claims, such as non-disclosure of medical conditions, potential risk factors, or inaccurate information during the application process. In this blog, we've compiled the five most common reasons that you should know about:
1.Death During Contestable Period
The first two to three years of a life insurance policy are a contestability period in which an insurer can deny claims under certain circumstances. This grace period allows the insurer to fact-check if the policyholder has given accurate information. If the insured person passes away during this period and any information is found fraudulent, omitted, or misrepresented, the claims can be denied.
2.Inability to Pay Insurance Premiums
Sometimes, as a beneficiary, you might ask for a claim without realizing that the policyholder couldn't pay the premiums before death. If the policyholder fails to pay the required premiums timely, the coverage can expire. In certain circumstances, paying past due premiums with interest can reinstate the policy, but you need to contact your insurance company if they allow it.
3.Death by Drug Overdose
According to the life insurance policy rules, consuming drugs and alcohol is considered self-inflicting. The claim, in this case, is restricted by law. The insurer will not be liable for any loss sustained if the policyholder is under the influence of substance use and will deny the insurance claim by the beneficiary.
4.Non-Disclosure of Pre-Existing Medical Conditions
The policyholder must declare all medical conditions and other possible risk factors when purchasing a life insurance policy. If the policyholder fails to provide accurate information during the application process, future claims can be denied. Any lack of information is regarded as a misrepresentation, whether inaccurate or false statements or withholding of facts.
5.No Beneficiary Designation on File
A life insurance claim can be denied if the policyholder fails to name a beneficiary on the file. Every insurance company has rules regarding who gets the death benefit payout if there is no designated beneficiary. The insurance company will distribute the payment according to the applicable state laws or the policy conditions. If the insurer pays the benefits to the wrong person, it can result in a lengthy delay or denial.
The Bottom Line
If you're a beneficiary and feel that your life insurance claim was wrongfully denied, your first move should be to get in touch with the insurance company. If you can prove to your insurer that the decision was unjust or wrong, you can resolve the matter administratively without requiring judicial intervention.
However, if you're looking to contest a claim denial, seek a professional legal counsel's assistance to make sure that you understand your rights.