Understanding why claims get denied and how you can avoid these common pitfalls can help ensure that your beneficiaries receive the full payout they deserve. Our team of expert life insurance attorneys has successfully resolved numerous claims, including a recent $1.3 million Lincoln Financial life insurance claim, and we are here to guide you through the most common reasons why life insurance claims get denied. If you have Kansas life insurance claim issues call us.
1. Death During the Contestability Period
The contestability period typically lasts the first two to three years of the policy. During this period, life insurance companies have the right to investigate the policyholder's information and determine whether there were any misrepresentations or omissions in the application. If the policyholder dies within this period and the insurance company uncovers fraudulent information, such as non-disclosure of medical conditions or risky activities, the claim may be denied.
What you can do:
Always provide complete and honest information when applying for life insurance.
If you’re a beneficiary and the death occurs during this period, you should carefully review the denial letter and consult an attorney to assess if the denial was justified.
2. Inability to Pay Insurance Premiums
Life insurance policies require regular premium payments to remain in force. If the policyholder fails to make premium payments on time, the policy may lapse, leaving the beneficiary without coverage. In some cases, insurers allow policyholders to reinstate a lapsed policy by paying overdue premiums with interest.
What you can do:
Check the premium payment history to ensure the policyholder’s premiums were up to date.
If the policy lapsed, reach out to the insurance company to inquire if reinstating the policy is possible.
3. Death by Drug Overdose
Many life insurance policies have exclusions related to drug and alcohol use. If the policyholder dies as a result of a drug overdose, the insurer may deny the claim. This is because drug use is often classified as a self-inflicted act, which is typically excluded from coverage.
What you can do:
Review the cause of death carefully. If the overdose was accidental or occurred in circumstances such as an unintentional mix of prescribed medication, there may still be grounds to contest the denial.
Work with a life insurance lawyer to explore your options if the claim is denied for this reason.
4. Non-Disclosure of Pre-Existing Medical Conditions
Life insurance companies require applicants to disclose any pre-existing medical conditions, including chronic illnesses, recent surgeries, or treatments. If the policyholder fails to disclose this information, whether intentionally or unintentionally, the insurer may deny the claim due to misrepresentation. The insurer may argue that the policyholder would not have qualified for coverage had the medical conditions been disclosed.
What you can do:
Review the policyholder’s medical records and the application to identify any potential misrepresentations or omissions.
If you suspect the policyholder’s medical conditions were disclosed, contact the insurer to investigate the reason for the denial and appeal if necessary.
5. No Beneficiary Designation on File
If the policyholder did not designate a beneficiary on the policy, the insurer may deny the claim or distribute the death benefit according to state laws or the terms outlined in the policy. Without a named beneficiary, the payout could go to the estate, resulting in additional complications, including estate taxes and delays in distribution.
What you can do:
Ensure the life insurance policy has a designated beneficiary. If the policyholder did not designate one, investigate state laws regarding beneficiary designation and estate distribution.
If the insurer pays the benefits to the wrong party, seek legal assistance to challenge the decision and correct the error.