Many people rely on payouts from life insurance policies when a loved one, such as a spouse, passes away unexpectedly. After all, funeral costs and living expenses (mortgage, utilities, etc.) can quickly add up and become difficult to pay in these situations, especially if the person who passed away was the main source of income for the household.
Unfortunately, not all life insurance claims are approved. Some are delayed, and many are outright denied—and not always for a fair reason. This is why it's so important for life insurance beneficiaries and current policy holders to understand what their rights and responsibilities are when it comes to filing a claim, and what they should do if a claim is denied.
Do Find Out the Specific Reason for Denial
The first step after receiving a notice of a claim denial is to find out the specific reasoning for the claim being denied. This should be outlined carefully in your denial letter. If it's not, then you should contact the life insurance company right away; by law, you should be able to receive the reason for the denial in writing.
Don't Hesitate to Get Representation to Appeal the Decision
If you feel the reason for your denial was unjust or even illegal, then you should always appeal the decision. Appealing is the formal process of challenging the insurance company's denial of your claim. Typically, this must be done in writing, and the specific process for filing an appeal can vary from one insurance company to the next. In some cases, you may only have a certain number of days in which to file a claim, so be sure to act quickly.
Do Consult with a Life Insurance Attorney
Going through the appeals process without help from an experienced life insurance attorney is never recommended, especially for beneficiaries who are unfamiliar with the life insurance claims process to begin with. Instead, it will be better if you're able to consult and work with an experienced life insurance attorney who is familiar with these claims and will assist you every step of the way. Specifically, a life insurance attorney should be able to:
- Answer all your questions
- Get all paperwork needed
- File a 100-200 page legal brief/appeal
- Handle an interpleader if necessary
Don't Mistake a Delay for an Outright Denial
Also, be aware that there is a major difference between receiving a denial for your life insurance claim and having it delayed. With a delay, there is a better chance that your claim will be approved; the company simply needs to do some research into your policy before they can make a decision. This is often the case in claims that have been made during a policy's contestability period, which usually lasts for two years from the original start date of the policy. Retaining a life insurance lawyer for the delay is key, as the claim will be faster and easier to resolve before denial.
Do Review Your Policy Documents Carefully
Finally, make sure that you always have updated copies of your life insurance policy documentation when dealing with a denial or delay in your claim. This is especially important as it will save your life insurance attorney time, as the policy can be immediately reviewed.
By keeping these important dos and don'ts in mind after having a life insurance claim denied, you'll be in a much better position to handle the situation—particularly if you have an experienced life insurance attorney on your side.