Denied life insurance claims can occur for various reasons beyond misrepresentation. Understanding these reasons is crucial for policyholders to ensure their claims are valid and for insurers to maintain the integrity of their policies. One common reason for denial is non-disclosure of material information. Unlike misrepresentation, which involves providing false information, non-disclosure involves failing to disclose relevant facts. If a policyholder neglects to mention critical details about their health, lifestyle, or medical history that could impact the insurer's risk assessment, the claim may be denied if those omitted facts are deemed material. Another reason for denied life insurance claims is policy exclusions. Insurance policies often include specific exclusions that outline scenarios or conditions under which the policy will not pay out. For example, certain high-risk activities like extreme sports or occupations may be excluded from coverage. If the cause of death falls under one of these exclusions, the claim could be denied, even if the policyholder was otherwise truthful and the premiums were paid on time.
Claiming for a pre-existing condition within the policy's waiting period is another common reason for denial. Many life insurance policies have waiting periods, typically one to two years, during which claims related to pre-existing conditions are not covered. If the insured passes away due to a condition that existed before the waiting period ended, the claim may be denied. Policyholders should be aware of these waiting periods and understand how they affect their coverage. Additionally, death during the contestability period can lead to denied claims. Most life insurance policies include a contestability clause, usually lasting for the first one to two years after the policy goes into effect. During this period, the insurer has the right to investigate any discrepancies or inaccuracies in the policy application. If the insured passes away during this time, and the insurer discovers material misrepresentations or non-disclosures, they may deny the claim based on those grounds.
Lastly, policy lapse or non-payment of premiums can result in denied claims. If a policy lapses due to non-payment of premiums, the coverage terminates, and any claims made thereafter would be denied. Similarly, if the insured fails to disclose changes in their health or lifestyle that could affect the policy's terms, such as smoking habits or dangerous hobbies, the insurer may deny a claim based on breach of contract. It's essential for policyholders to maintain their policies by paying premiums on time and promptly updating their insurer of any changes in circumstances to avoid claim denials for these reasons.
If you have a denied or disputed life insurance claim, our top life insurance lawyers can help.