Many people purchase life insurance as part of their financial planning. They want to ensure that their loved ones have financial security and stability in the future. Life insurance policies guarantee that a beneficiary receives the proceeds after an insured's death. Generally, life insurance proceeds are paid much faster than the decedent's other assets, mainly because life insurance is a non-probate asset. If proper claim settlement practices are followed, a life insurance payout is made within 1-2 months after the insured's death.
However, many beneficiaries wait months and even years to receive the benefits. Mainly, it happens because the insurance company delays paying the claim. The delay can cause major financial problems for families, especially if the insured was the main breadwinner in the family. The emotionally trying time for the surviving family members is compounded by frustration from dealing with an insurance company. Insurance companies use various delay tactics.
Beneficiary Disputes: When two or more competing claims are filed for the same amount of life insurance proceeds, the insurance company may delay the payment of the claim indefinitely. If you are represented by counsel, your attorney will enter into negotiations on your behalf and will make sure that you receive the full amount to which you are entitled under the policy. If you are not represented by counsel, the insurer and the opposing side may pressure you into accepting a small amount of money in exchange for your promise to give up any right the proceeds. Many people who lost a loved one feel exhausted by the long negotiations process and may accept such an offer. We encourage you to speak with an attorney before you accept any offers from the insurer or the competing claimant.
Contestability Period: If the policy was purchased less than two years before the insured's death, it is in the contestability period. It means that the insurance company has a right to contest the policy by looking at the medical records of the insured. Most states have statutes which provide that if an insured made a material misrepresentation on the life insurance application, the insurer may rescind the policy. The delay may occur when the insurance company claims it cannot get all the records of the insured. The delay may last as long as several years. Do not let the insurance company convince you that a long delay is a normal practice. Most state laws require the insurer to finish the review of the claim in 60 days. Anything over the 60-day period is likely to be considered a wrongful unreasonable delay.
Incorrect Documentation: When a beneficiary files a claim, several documents should be submitted. When an insurer delays the administration of the claim alleging that the beneficiary provided incorrect or incomplete documentation, please call a life insurance lawyer for help.
Improper Authorization: When a person applies for life insurance, he/she signs an authorization to allow the insurance company to request his/her medical records. When an insurer claims that a proper authorization is missing, causing a delay in paying the claim, consult with legal counsel. Most likely the insurance company is using this tactic to delay payment of a valid claim.
Fraud Investigation: In some cases, an insurer may claim that it suspects fraud in obtaining the policy and, therefore, delays paying the claim. It may accuse the insured of fraud in procuring the policy. These are serious allegations and you should seek attorney representation to protect your rights.
At our firm, we dedicate our time and skills to help clients fight cases of delayed and denied life insurance claims. If your claim has been unfairly delayed for more than a month, please call us for help. We never charge you a legal fee unless we can get you a financial recovery.