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Why insurance companies may deny a life insurance claim

On Behalf of | Jan 13, 2022 | delayed and denied insurance claims | 0 comments

Losing loved ones can be very difficult for people in the Austin area. They lose the love, affection and support the loved one provided which can be very difficult to replace. They also can lose significant financial resources as well. The loved one may have earned a significant amount of the income for the family and without it, life can change dramatically. One way people try to prepare for this possibility is by obtaining a life insurance policy so their beneficiaries will be taken care of if they pass away.

Many families rely on these benefits to carry on with life moving forward. However, like other insurance policies there are certain exclusions from coverage and sometimes insurance companies deny life insurance claims. This can be devastating for the family especially if they were expecting to receive the payment and need the payment. It is important to know why life insurance claims may be denied to help ensure that will not occur.

Some of the common reasons that insurance companies deny claims are:

  • The manner of death: Many policies will not pay life insurance benefits if the death was caused by a suicide during the first couple years of the policy; while engaging in dangerous excluded activities that have a higher likelihood of death or if the death occurred while the decedent was engaged in unlawful activity.
  • Failure to pay premiums: Most life insurance policies require monthly payments. If people stop making these monthly payments the policy can be cancelled without the beneficiaries’ knowledge.
  •  Misrepresentations on the application: If the applicant lied about their age, failed to disclose certain medical conditions that they may have or conditions that direct family members have, the application can be denied. It is important that applicant is completely honest on the application.

While the reasons stated above are valid reasons for insurance companies to deny a life insurance claim, there are also times when insurance companies deny claims without a valid reason. People have the ability to appeal a denial though.

It is important for people in Texas to understand the policy itself and the actual circumstances that resulted in the death. If the denial was improper the initial decision can be reversed and people will receive the benefits. The appeal can be complicated though as simply understanding all the provisions of the insurance policy can be complicated. Experienced attorneys understand these policies though and may be a useful resource.