Handling a Denied Life Insurance Claim
Posted on behalf of Phillips Law Group on Mar 19, 2020 in Personal Injury
Life insurance pays a lump sum benefit to surviving family members or others listed as beneficiaries after your death. This could help cover funerial and burial costs, daily living expenses and certain debts. Unfortunately, these policies contain many loopholes that life insurance companies often try to use to their advantage to devalue or deny claims.
If this has happened to you, you need experienced legal representation on your side. Our lawyers at Phillips Law Group further explain why life insurance claims are often denied and how our lawyers may be able to help you resolve a claims dispute. Request a free, no-obligation consultation to speak to a member of our legal team today.
Reasons Life Insurance Companies Deny Claims
In many cases, insurance companies keep their promise and pay benefits to the beneficiary after the policyholder’s death. However, life insurance claims are often denied for many reasons. Some of these reasons may not be legitimate, even though they may sound valid to policyholders, who may not understand the terms of their policy or the tricks insurance companies often use.
Death Occurred During Contestability Period
In most states, including Arizona, the first two years of a life insurance policy is considered a contestability period. This is a period when the insurance provider can review and fact-check information on a life insurance application.
If the policyholder dies within the contestability period, the insurance company can contest the policy and will launch an investigation into the claim to either approve or deny it. This includes looking at medical records and assessing the terms of the policy and the terms of the policyholder’s death.
Any misrepresentations or inaccurate information provided could result in a claim denial, even if the death had nothing to do with the misrepresentation.
Nonpayment of Premiums/Lapse in Policy
Life insurance policies are usually only active when premium payments are up to date. The grace period for making late payments in the state of Arizona is 30 days. When premiums are not paid, a policy may lapse, and you will no longer be covered. A policy can be terminated after missing just one premium payment.
Claims are commonly denied due to lapses and life insurance companies often use nonpayment of premiums as a reason to deny a claim when it should be payed out.
Beneficiaries have a right to know whether the insurance provider sent premium-due notices to the correct address and whether the notice clearly warned the policyholder of the impending lapse.
Lack of Beneficiary Designation
If the policyholder fails to name a beneficiary, the life insurance claim can be denied. There must be a designated beneficiary for the life insurance company to pay out death benefits.
Should this happen, the insurance provider may pay the death benefit to the estate of the deceased. This could result in lengthy delays in obtaining benefits.
Cause of Death Outside of Policy Coverage
Life insurance policies have certain exclusions that describe causes of death that the policies will not cover. These exclusions are carefully worded by insurance companies and in the event of a loved one’s death, it can be difficult for beneficiaries to know whether the death is covered by the policy.
For instance, if the policyholder’s death was the result of suicide and the policy does not cover this type of death, then the life insurance claim will be denied.
Even though many exclusions can cancel each other out, life insurance companies still use them routinely to refuse to pay claims.
Failure to Disclose Necessary Information
Another common reason for insurance claim denials is when policyholders fail to disclose information required by the insurance company to measure the risk of a policy payout.
For instance, if a policyholder had a pre-existing condition, such as high blood pressure, and it was not disclosed in his or her medical record, the life insurance claim could be denied by the insurer.
Life Insurance Cases Our Firm Handles
Our lawyers are prepared to handle cases involving many life insurance disputes, including but not limited to:
- Delayed or denied life insurance payments
- Last minute or improper changes to beneficiary designation
- Multiple beneficiaries disputing distribution of benefits
- Delayed or denied AD&D payments for unintentional deaths
- Lack of beneficiaries listed on the policy
- Denials based on alleged misrepresentation or payment lapses
- Conflicting percentages allocated to beneficiaries
- ERISA life insurance policies purchased
Resolving a Life Insurance Claims Dispute
If the claim is denied or delayed, it is important that you reach out to the insurance company to find out why. Do not let them give you the runaround. If the denial was based on something you may be able to fix, such as a filing mistake or missing documentation, do what is necessary to fix the error.
Should the insurance provider not give you a legitimate reason as to why they refuse to make a payment or offer a reason that violates its obligation to uphold the terms of the policy, your claim denial may have been done in bad faith. At this stage, we recommend having a qualified lawyer represent you to help ensure that your rights and best interests are being protected.
Contact Our Lawyers for More Information
When life insurance claims are denied, it is important to have legal support. An experienced Phoenix personal injury lawyer from Phillips Law Group is prepared to handle all communications and negotiations with the insurance company on your behalf. We work hard to pursue maximum compensation for our clients.
Our services are provided on a contingency fee basis, so there are no upfront fees involved. We only get paid at the end of the legal process of we are successful in helping you obtain compensation.
Schedule a free consultation. No risks or obligations. 1-800-706-3000.