Life insurance is intended to provide financial support to a person’s loved ones when he or she passes away. It can be very difficult for them if the life insurance company denies their claim for benefits.
There are some common reasons a claim may be denied. If the policyholder did not pay the premiums or did not pay them on time, the policy may lapse. The beneficiaries may be unaware that the policy is no longer in place until they file the claim.
Also, a life insurance company may claim that the policyholder misrepresented information on the application for coverage. Usually, this includes inaccurate information about the applicant’s age and health conditions but can also include false income information, a failure to disclose other life insurance coverage or incorrect information provided by the applicant’s life insurance agent.
Sometimes there are also time exclusions in the life insurance policy, meaning that claims may be denied if the applicant passes away within a year or two of taking out the policy, for example. It may also include event exclusions, like suicide or passing away while performing a dangerous or illegal activity.
There can be a denial for an administrative reason as well. The claim may have been denied simply because the beneficiaries did not complete the correct paperwork or submit a death certificate to the insurance company.
Challenging a denial
Many life insurance policies have accompanying documents that will explain how beneficiaries can appeal a claim denial. However, there may be a time limit to appeal. An experienced insurance claims attorney can review the denial and offer advice about next steps.