Unfortunately, there are countless reasons as to why a life insurance claim could be denied or delayed. The reason could be as simple as a failure to provide adequate documentation or even a tiny mistake on the claims form. However, one of the more common causes for a death benefits claim being denied is that of an accidental lapse in coverage—which occurs when the life insurance premium isn't paid on time or in the correct amount. Read about life insurance lapsed policy
By understanding life insurance lapses and claims denials, you'll be in a better position to protect your rights should you ever receive a denial for this reason.
Criteria to Approve a Death Benefits Claim
Typically, there are a few simple criteria that must be present in a claims application for the claim to be approved and paid out by a life insurance company. For starters, the life insurance coverage must have been valid at the time of the insured's death. Furthermore, it is important that all necessary documentation be provided along with the claim application, including the death certificate or a certified copy of it.
Finally, the insurance company must go through the claim and the person's coverage to ensure that no exclusions apply to the claim that would cause it to be denied. For example, some policies have a "suicide clause" in place that prevents a payout if the insured commits suicide.
What Causes a Life Insurance Policy to Lapse?
Generally, a life insurance policy will not lapse unless the policy-holder fails to make the proper payments on it in a timely manner. With most life insurance companies, there is a grace period in place that can last anywhere from a month to even two months, so you would have to fail to make payments for multiple billing cycles before the coverage would lapse and no longer be valid.
Unfortunately, if the insured passes away while the policy has lapsed, death benefits claims can be denied to his or her beneficiaries—even if the lapse was a complete accident or mistake.
Steps to Take Following a Claim Denial Due to Lapse
If you have recently received a notice that your death benefits claim has been denied because of a supposed lapse in coverage, the best thing you can do is to speak to a life insurance attorney as soon as possible. It is not unheard of for a less-than-honest life insurance company to claim that a policy had lapsed, even if it didn't. Furthermore, it's always possible that an honest mistake has been made.
Regardless, the most important thing to remember is that life insurance claim denials can be appealed. However, this isn't something you should attempt on your own. Instead, you should work directly with an experienced life insurance attorney who has at least 15 years of experience, and who will be able to submit a solid 100-200 page brief full of applicable case law.
Facing a death benefits claim denial can be devastating, but you don't have to accept "no" for a definite answer. Consult with a life insurance attorney today to discuss your case, and appeal the life insurance company's initial decision.