Our life insurance lawyers recently resolved a tough denied Globe Life insurance claim. Have you recently experienced a life insurance claim getting denied, and you aren’t sure the reason? While frustrating, this is more common than you may think. Let’s look at the most common reasons they may get denied.
The Death Happened During Contestability Period
Pretty much every life insurance policy has a contestability period shortly after the policy is taken out. This is an allotted time when the life insurance company can investigate the death of the policyholder and deny the claim based on what they find.
It’s important to know the contestability period of the policy before filing a claim to avoid this unexpected denial. Depending on the policy, the contestability period can be as long as two years since the policy was taken out.
While a death during the contestability period doesn’t mean an automatic denial, there are higher chances of denials during this period. This is why it’s important to not misrepresent or omit any information about your health when taking out a policy.
The Type of Death Isn’t Covered
Depending on your life insurance policy, there may be certain death conditions that aren’t covered under the policy. Older life insurance policies often had exclusions for deaths that occurred while engaging in dangerous activities. Passing away due to activities like sky diving could once result in a denied claim.
However, the most common death exclusion in current life insurance policies is death by suicide. Depending on your policyholder, you may be able to get this exclusion waived if the suicide occurred after the contestability period of the policy.
There Was Omitted Relevant Personal Info
Likely the most common reason for a life insurance claim denial is when the policyholder fails to disclose information that was relevant to the risk measurement for the policy.
If your insurance company finds that you weren’t honest about things like your health conditions, they may deny the claim for payout. However, not all misinformation is enough for a denial. Giving the wrong address or other information like that is usually not considered intentional misinformation.
If you’re in your contestability period, there are more pieces of information that can be grounds for a denial. Not being honest about your previous convictions for activities such as driving under the influence can cause a denial during this period.
This is why it’s crucial to be thorough and honest when you fill out your application for a life insurance policy.
You Didn’t Pay Your Premium
As with all types of insurance, it’s crucial to keep up with your premium payments in order to keep your coverage active. Insurance companies will deny a claim if the life insurance policy was allowed to lapse due to lack of payment.
The best way to avoid this is to set your payments on an automatic withdrawal, so you never miss a payment. This is an especially good idea if the policyholder is a senior because they may develop memory issues, leading them to accidentally allow their coverage to lapse.
Takeaway
It’s important to know the most common reasons life insurance claims get denied so you can do your part in avoiding that issue for your loved ones. While it’s possible to contest a denial, it can be a lengthy process that’s usually avoidable with proper handling of your policy!