Most people buy life insurance to provide financial stability for their families upon their death. Considerations in determining how much life insurance to purchase often include how many dependents the insurance applicant has, the standard of living the applicant wants for his or her family and the other financial resources that will be available after death, such as Social Security benefits, savings and investments.
For families with children, another consideration is how the dual requirements of bringing in an income to support the family and caring for the children will be met by a single parent. Some families choose to buy enough insurance so that the remaining parent can stay home with the children until they reach a certain age. Other families want to supplement the income of the remaining parent who will continue working but will need to pay for household help and childcare. Other families simply want to make sure that the remaining spouse is not burdened with unexpected medical bills, funeral costs and estate taxes.
Whatever the specifics of a family’s needs when purchasing life insurance, the goal is financial security when the family loses income and/or the value of household services provided by one parent when he or she dies.
The Effects of Denied Life Insurance Claims
A denied life insurance claim can destroy a family’s financial security. A Los Angeles Time article examining denied insurance claims told the story of a woman, who at age 62 lost her house when her husband died and the insurance company denied her life insurance claim. She started renting a room and was so distraught that she was unable to continue her regular job. She took on odd jobs caring for elderly people just to pay her bills.
Another widow highlighted in the article mentioned that she and her husband had planned for enough life insurance to keep the family business open and maintain their standard of living for their school-age children. When Jean Lin’s claim was denied, she had to close the business, sell her house and move her children into a condominium.
For a third widow mentioned in the article, the denial of her claim on her husband’s life insurance policy meant that her daughters no longer had a college fund. Her husband’s plan was to make sure the girls would get through college if he died, but the denied life insurance claim ended that plan.
Depending on the cause of death, many surviving spouses are left with unexpected expenses that can include medical bills, car repairs, burial or cremation costs, funeral expenses, mental health care, taxes, legal fees and more. These expenses come at a time when the spouse may be paralyzed with grief and coping with a 50 percent reduction or more in the household income.
The denial of a life insurance claim is not always final. Many times, denials can be contested and agreements can be worked out either for the full amount or a partial amount. Having an experienced life insurance attorney represent you can increase your chances of getting a denied claim reversed. Chad G. Boonswang has helped many families through this process. Contact Boonswang Law right away for your free consultation.