Denied life insurance claims are a distressing reality for many families who rely on these policies for financial security after a loved one’s death. While life insurance is designed to provide peace of mind, various factors can lead to claim denials, leaving beneficiaries in a bad spot. Understanding the underlying reasons and terms associated with denied claims can help policyholders and beneficiaries better navigate this complex world. Our top life insurance attorneys are here to fight for you. We fight against life insurance companies such as: Assurity Life; Great-West Life; Gerber Life; Brighthouse; and more.
One of the most common reasons for a denied claim is non-disclosure or material misrepresentation during the application process. Non-disclosure refers to the omission of critical information, such as pre-existing medical conditions or hazardous activities, while material misrepresentation involves providing false or misleading details. For instance, if a policyholder fails to disclose a history of heart disease or claims they don’t participate in high-risk activities like skydiving, the insurer may void the policy upon discovery. These omissions or inaccuracies are particularly scrutinized during the contestability period, a timeframe which is typically the first two years after a policy is issued, when insurers can investigate and deny claims based on such findings. Another significant issue arises from pre-existing conditions that were not disclosed during the application. Insurers often include clauses that exempt coverage for deaths related to these conditions, especially if the policyholder was aware of them and failed to report them. Similarly, policies may lapse due to non-payment of premiums, rendering them inactive. A policy lapse can occur inadvertently, particularly if the policyholder faces financial difficulties or misunderstandings about payment schedules. Insurers are unlikely to honor claims for policies that are no longer active at the time of death.
Incomplete documentation is another common hurdle for beneficiaries. When filing a claim, insurers typically require a host of documents, such as the death certificate, medical records, and proof of identity. Missing or inaccurate paperwork can delay or result in outright denial of the claim. Fraud is another factor that leads to denials; for instance, if an insured individual deliberately misrepresents their age or gender during the application process, it can result in a misstatement of age/gender claim denial. Policy exclusions also play a crucial role in denied claims. These exclusions are specific circumstances outlined in the policy where coverage does not apply. Deaths resulting from illegal acts, suicide within the suicide clause period, or high-risk activities are often excluded. For instance, if a policyholder dies while committing a crime or engaging in extreme sports not disclosed during the application, the insurer may refuse to pay the benefit. Similarly, deaths related to a hazardous occupation, such as mining or firefighting, may not be covered unless explicitly stated in the policy.
Disputes among beneficiaries can also lead to claim delays or denials. A beneficiary dispute may arise when multiple parties claim the death benefit or when the named beneficiary is challenged in court. For example, if a policyholder’s will conflicts with the insurance policy’s named beneficiary, the dispute must be resolved before the insurer can release funds. Certain cases involve foreign death, where the policyholder dies while traveling or living abroad. Insurers may require additional documentation, such as official government reports, to verify the death, and if these documents are unavailable or deemed insufficient, the claim may be denied. Similarly, deaths resulting from a prescriptionissue or substance abuse are often scrutinized, particularly if the policyholder’s medical history indicated prior addiction issues.
Policy misinterpretation by the policyholder or beneficiaries can lead to confusion about what is covered and what is excluded, resulting in denied claims due to unmet conditions. Finally, insurance fraud, intentional deceit to obtain financial gain is a serious issue that insurers actively investigate. For example, staging a death, falsifying documents, or fabricating circumstances surrounding a policyholder’s death can lead to not only claim denial but also legal consequences for those involved.
Denied life insurance claims highlight the need for a thorough understanding of the terms and conditions of one’s policy. Our life insurance law firm handles all delayed and denied life insurance claims, as well as beneficiary disputes and interpleader lawsuits.
We have handled countless denied claims from life insurance companies such as: AIG; Primerica; Brighthouse Financial; Penn Mutual; Sammons; Bestow; Ethos; Ladder Life; and more.