quick Facts
- Claims are rejected at least 1% of the time and only in certain circumstances such as fraud, misrepresentation or non-payment of premiums
- You must appeal the decision if you believe the refusal was incorrect or unfair
- Gather all supporting documents to support your claim
What if you invested your efforts and hard-earned money in getting life insurance policy, Making payments in a timely manner, filing a death benefit claim only to be told that your life insurance company has denied your claim? It may come as an unwelcome surprise because life insurance companies deny a policy claim 1% of the time.
However, some conditions can lead to rejection. For example, if the policyholder fails to make payments on their policy or provide adequate medical information prior to the application process.
If your claim is denied, you can expect the life insurance company to refund any life insurance premiums made and cancel your policy. You can also decide to appeal the decision by contacting the insurance company directly. However, this will only change something if there were omissions or miscommunications during the processing of your application.
In this article, we delve into such scenarios and guide you through understanding the valid reasons for a life insurance claim to be denied and the available forms of recourse.
Why are life insurance claims rejected?
When you buy life insurance, there is an underlying assumption that the policy will provide a financial safety net in the event of your death. That’s why it can be so frustrating to hear that a claim is denied. After all, life insurance is meant to give you and your family some peace of mind.
Here are a few Reasons for not paying life insurance.
Exclude suicide
Most life insurance policies come with a Exclude suicide. Suicide exclusion means that in the first two years of coverage, Insurance companies will not pay for deaths caused by suicide. This provision protects an insurance company from fraudulent claims or individuals who purchase life insurance before they commit suicide.
Exceptions to the policies
Another reason life insurance companies may deny claims is if the policyholder dies while committing a crime or other action expressly excluded in their policy.
For example, the benefit may be reduced or denied entirely if the policyholder participates in extreme sports activities upon his death.
distortion in the application
Providing false information about your application may result in a complete denial or reduction of any associated benefits. Therefore, it is imperative that you be honest when filling out your life insurance application so that your benefits are not canceled due to incorrect information provided. Discover What happens if you lie on your life insurance application?
Non-payment of installments
Any unpaid premiums can also result in a claim being denied. Life insurance policies require policyholders to make timely payments throughout the competition period (usually the first two years of coverage). Failure to do so may result in loss of coverage and denial of the claim. Learn more about What happens if you don’t pay your life insurance premium?.
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What to do if your life insurance claim is denied
There are two things you can do if your claim is denied:
- Call the insurance company
- Refusal appeal
Let’s look at each of these options in more detail.
Call the believer
The first step in appealing a denied claim is to understand the denial. Carefully read the insurance company’s initial refusal letter and determine if the reasons are clear or if sufficient evidence has been provided.
Next, contact your insurance provider and request additional information regarding why they are refusing to pay the death benefit. Necessary documents can include medical records, autopsy reports, or proof of annuity payments, and all evidence that proves the validity of your claim.
Tracking the schedule is vital when appealing a claim from an employer group life insurance policy. These policies usually have limited appeal periods, usually no longer than 60 days.
Appeal on refusal
If after examining the paperwork the claim is still denied, you may need to file an appeal. You can do this by submitting a formal letter of appeal to the insurance company, which should state your argument and any evidence you wish to provide.
Your state’s insurance department can help guide you through the process and provide other forms of assistance.
Get a lawyer
No one wants to hire a lawyer, but he may be the best option for denied life insurance claims. After all your attempts with the insurance company have been unsuccessful and you feel that you have reached a dead end, head to an experienced lawyer.
An attorney can give you professional guidance as to whether there is a realistic chance of success if you choose to take legal action. They can also assess other details such as the complexity of the case or the type of fees and costs you should expect.
How to prevent a claim being denied
As we discussed earlier, there are many reasons why life insurance companies may deny claims. The good news is that you can take steps to ensure that your life insurance claim is approved.
application responses
An essential part of the life insurance application process is providing detailed answers about health and health-related activities such as smoking, prescription or other medications, and dangerous hobbies.
You must also provide accurate and current information to reduce the possibility that a claim will be denied due to a misrepresentation of your application.
Understand the terms and conditions
Read and understand the terms and conditions of your life insurance policy. This will help ensure that all requirements for filing a claim are met and avoid unnecessary delays.
Application review
Before submitting your application, read everything carefully for accuracy and completeness. If you are applying for employer-provided life insurance coverage, ask your benefits administrator or human resources representative to review your application.
How to protect beneficiaries from claim denial
Life insurance provides financial support for your family after your death. However, if the beneficiaries are unable to file a successful claim, they may not receive the money they need. If you want to make sure your loved one’s claim is not rejected, here are the best steps.
- Be sincere in your request. Do not attempt to hide any health issues or other relevant information as this may increase the likelihood that a claim will be denied once the policy is in effect.
- Pay your bills automatically. Set up automatic payments for life insurance premiums so you don’t have to worry about missing any payments or losing coverage.
- Update your beneficiaries. Be sure to update the beneficiary information on your policy regularly so that the designated recipients receive the proceeds in the event of a claim. Learn how to choose a life insurance beneficiary.
- Share your plans with your beneficiaries. Tell your beneficiaries about your life insurance plan and how they can file a life insurance claim if needed.
You can contact your insurance company for assistance if you need clarification on any of the above steps. They should be able to provide guidance and help you ensure that your beneficiaries do not reject the claim.
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What to do if a life insurance claim is denied: Conclusion
No one expects their life insurance claim to be denied, but unfortunately, it does happen. Therefore, always be upfront and direct when applying, as this tactic has a significantly higher success rate than trying to get around the application process.
If your claim is denied, don’t give up. You may still be able to successfully appeal your denied life insurance claim with the help of an experienced attorney.
And remember to take preventative measures, such as providing accurate responses to your request or updating your beneficiary information regularly.
Frequently Asked Questions
Can You Fight a Life Insurance Rejection?
If you have been denied life insurance and you believe it is due to incorrect or insufficient medical information, there are still ways to respond. You can appeal the decision to the life insurance company. The best place to start is to ask your doctor to send updated medical files to the life insurance company to prove your eligibility. However, such a procedure is time consuming and requires more paperwork and advanced communication with multiple parties.
Why would a life insurance company deny a claim?
Denial of a life insurance claim is generally due to misrepresentation of facts or non-disclosure on the part of the policyholder. These could include errors or omissions of facts in the application, late payment of premiums, or death due to an excluded cause.
How often does life insurance deny claims?
Only about 1% of claimants in the United States experience a life insurance claim rejection. In most cases, this is due to an issue with the policy itself or misrepresentation of facts by the policyholder or beneficiary. But if you paid the premiums on time and were honest when filling out the policy application, the odds of receiving reimbursement are excellent.
What is the competitive period of life insurance?
It’s basically a clause in your agreement with your service provider that says if the policyholder passes within two years of purchase, the insurance company can, within limits, examine the circumstances and question any claims made by beneficiaries.
What happens if the insured dies during the competition period?
Dying while competing on a life insurance policy can be an anxiety-provoking time, as there are usually clauses in the contract that can void the policy.
Fortunately, life insurance companies are still required to honor these contracts. They will review the claim to make sure everything is correct and in order to ensure that the decision to underwrite the life insurance was based on the correct facts.
What happens after the competition period?
At the end of the competition period, any fixed insurance policy is held. This means that once this time frame has passed, the recipient no longer has to worry about the insurance company contesting their claims. They will be legally entitled to receive the benefits in accordance with the parameters of the contract. In short, if you make it through this period unscathed, you can rest assured that your insurance company can no longer deny your claims.
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Editorial Tips: We are a free online resource for anyone interested in learning more about life insurance. Our goal is to be an objective third party source for all things life insurance. We update our website regularly, and all content is reviewed by life insurance experts.
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It has been previously reviewed Former state farm insurance agent |
