You and your spouse responsibly planned ahead for what would happen if one of you were to die. You purchased enough life insurance to keep the house and take care of the kids, but now the bills are piling up because the insurance company has denied your claim. You are not alone.
Each year, thousands of life insurance claims are denied. Insurance companies make money by receiving premiums, not by paying out claims. They have an incentive to deny or reduce payments for claims. Sometimes the denial is appropriate, but many times a denial is a tactic to avoid paying a legitimate claim. A life insurance attorney can help you sort out the reasons your claim has been denied and help you receive the maximum settlement to which you are entitled.
Misstatement of Fact on the Life Insurance Application
If an applicant misstated or lied about material information during the insurance application process, the insurance company can deny the claim. What can be considered material information? If the insurance company would have refused to issue the policy or charged considerably higher premiums had the applicant told the truth, the lie is considered to be “material.” The insurance company may deny the claim because it was misled during the application process. Each state has its own laws defining material misstatements and whether those misstatements will be excluded from an incontestability clause.
Death Occurred Within Two Years of Life Insurance Purchase
Almost all life insurance policies include an incontestability clause. This is a provision that says that if an insured dies within a certain period of time after the policy is issued, the insurance company can question the legitimacy of the original application for coverage. If the insured dies after that time period, the insurance company cannot deny a claim based on mistakes or misstatements made by the applicant while applying for life insurance. State law governs incontestability clauses.
Death Occurred Soon After Claim Was Purchased
When a death occurs within a few months after a life insurance policy is purchased, the insurance company will likely have questions about the timing, and therefore may deny the claim. Alternatively, the company may delay any payment until completing an investigation into both the circumstances of the death and the purchase of the policy.
Cause of Death Is Not Covered By the Policy
Many life insurance policies exclude certain causes of death, such as suicide or accidents occurring during extreme sports. Somewhere in the fine print of the life insurance policy is a list of causes of death that are excluded from coverage and the time periods for the exclusions. If the insurance company finds that a policy holder died of one of the excluded causes within the applicable time period, the claim will be denied.
Insurance Company Disputes the Cause of Death
Excluded causes of death in life insurance policies are often vaguely worded, as are causes of death on the death certificate. For example, when “cardiac arrest” is listed as a cause of death, it can cover a range of reasons why a person died. In addition, causes of death may be described as “presumed” or “probable,” allowing plenty of room for an insurance company to dispute the stated cause.
If you have a denied life insurance claim, Boonswang Law can help you appeal the denial and receive the maximum amount to which you are entitled. Attorney Chad G. Boonswang handles claims across the country. Contact him today for your free consultation.