A Denied Life Insurance Claim is Just the Beginning
Americans believe in and rely on life insurance policies. About 60% of U.S. adults own some type of life insurance policy, and even more say they’d recommend life insurance to family and friends. In fact, faith in life insurance is growing—77% of young adults recommend life insurance, as compared with 66% of all adults.
When life insurance works as it’s supposed to, it can provide tremendous relief for those the deceased left behind. Life insurance claim denials can shake the foundation the deceased built for his or her loved ones, and create turmoil at a time when the family should be focused on healing.
Fortunately, a life insurance claim denial is not the end of the road. With an experienced attorney on your side, it is often possible to reverse that decision and receive full benefits under the policy.
Life Insurance Contestability Period
Some of the greatest problems with delayed or denied life insurance claims arise during the first two years that the policy was in effect. This is known as the “contestability period” or the “contestable period.”
In plain English, that means that when an insured dies during the first two years of coverage, the life insurance company has the right to review information provided by the applicant and outside evidence and to deny the claim if there was a “material misstatement” in the application process.
Among other things, the insurance company may secure the insured’s medical records and compare them with the application to determine whether any material misstatements were made. Insurance companies regularly take advantage of this opportunity. In part, that’s because they are hoping to find a reason to deny the claim. Another reason is that the contestability period review provides an excuse to delay payment of a life insurance claim.
An actual material misstatement can provide a legitimate reason for denying the claim. For example, if the insured was aware that he had a serious medical condition at the time of the application and concealed that information, the insurer may have grounds to deny the claim. However, denied life insurance claims are often based on simple errors or oversights in the application process that are in no way material to the policyholder’s insurability.
Insurance companies bank on beneficiaries not understanding what is and is not a material misrepresentation, and that often works. People who are unfamiliar with the law as it relates to life insurance claims and who are absorbed in processing the death of a loved one and other life changes often take the insurance company’s word and move on. That’s usually a mistake.
Justifications for Denying Life Insurance Claims
Some other common “reasons” offered for the denial of life insurance claims include missed payments and policy limitations that exclude the cause of death. While these issues may seem black and white and are often readily (if reluctantly) accepted by the grieving beneficiary, even this type of denial isn’t necessarily the final word. Some opportunities to contest the insurance company’s denial include:
- Asserting that any misstatement identified was not material
- Disputing the insurance company’s determination as to cause of death
- Proving that a late insurance premium was paid within the grace period
- Arguing for a different interpretation of a policy term such as an exclusion
In some cases, you may be able to receive benefits even if the facts are not entirely on your side. For instance, our law firm has secured full benefits even in cases where the insurance premium was not made within the grace period.
Talk to an Attorney Experienced in Denied Life Insurance Claim Cases
The best-case scenario for an insurance company is the worst-case scenario for policyholders and their families. An insurance company makes the most profit when an insured pays life insurance premiums for years, but the company never has to pay out a claim.
If you’ve had a life insurance claim denied or your claim is being delayed, don’t take the insurance company’s word for anything. Talk to an attorney who handles life insurance claim denials as soon as possible
Our life insurance attorneys have a solid track record in helping people fight life insurance claim denials. Schedule a free consultation to learn how we can help you.