A life insurance policy is intended to provide a safety net—a means to secure funds for the beneficiaries and the policyholder's loved ones. It should be a straightforward process where the payout is approved, ensuring timely disbursement to the designated recipients. However, this is not always the reality. Insurance companies often search for reasons to shift blame onto the insured or their representatives, hoping to evade rightful payouts. Delays in processing and denials due to faulty paperwork are just a few examples of the challenges encountered.
When faced with claim denials, it can feel as though you're being led in circles, grappling with unfamiliar words and phrases that seem devoid of meaning. To help you navigate this daunting terrain, we have compiled a list of key terms you may encounter when dealing with denied claims. Remember, this is just a selection of the terminology:
Reinstatement: The immediate reactivation date of a policy following its termination for various reasons. This becomes relevant if the insured's death occurs during the period between the termination of the original policy dates and the subsequent reinstatement after resumed payments.
Right to Examine: The designated period during which the policyholder can thoroughly review the policy and decide whether to retain it or cancel it for a refund. This right is often cited by insurance companies when claims are denied, implying that the policyholder had the opportunity to examine the contract earlier.
Reduced Paid-up Insurance: When a policy payment is reduced or altered in some way, resulting in a drop in premiums or even eliminating premium payments while maintaining an active policy.
Grace Period: The duration during which a policy remains active even after the last payment has been made. Typically ranging from 30 to 60 days, the grace period becomes relevant if the claim is denied due to the death occurring outside the policy's covered time frame.
Contestability: The insurance company's ability to contest and investigate the circumstances surrounding the insured's death, particularly if foul play is suspected. This often applies to situations where the insured's death immediately follows the policy's activation or when errors are detected in the paperwork.
If you have further inquiries about denied claims terminology and jargon, please don't hesitate to contact our offices.