Texas residents often purchase life insurance to provide financial security for their loved ones after their death. They may intend for it to be used to replace their salary, for a child’s education or for future savings.
Unfortunately, when it comes time for a loved one to file a claim to collect the life insurance, it may be denied.
It’s important for the policyholder to pay the premiums on the policy as required. If the payments are not made timely and in full, the policy may lapse. If the policy lapses, meaning it is not active at the time of the policyholder’s death, the life insurance company may deny the claim.
The policyholder should also be truthful when he or she applies for life insurance. If he or she fails to include relevant information, such as family history or a medical condition, the life insurance company may consider that as a misrepresentation of information or fraud and deny the claim.
Some life insurance policies also have specific limitations and exclusions. For example, if the policy excludes coverage for death by dangerous activities and the policyholder dies in that manner, that may also be a reason for a claim denial.
If there is a dispute among the policyholder’s beneficiaries about what they are owed, the insurance company may decide to withhold the payment until the dispute is resolved.
It may also withhold payment if it needs to investigate the circumstances surrounding the policyholder’s death.
If the claim is denied or withheld, the beneficiaries may have an option to appeal the decision.