Common Reasons Why Insurers Deny Life Insurance Claims

We purchase life insurance policies in support of those we love – to help ensure they’re provided for in our absence. If you’re the beneficiary of a life insurance claim, it stands as a testament to your lost loved one’s care and concern regarding you. If the claim is denied, however, it’s a denial of the support your relative invested in and leaves you without the support you’re entitled to receive. 

Better understanding the reasons why life insurance claims are commonly denied can help you better navigate the path forward. If your claim has been denied, a wise early move is reaching out for the skilled legal counsel of an experienced life insurance claim attorney. 

Reason 1: Inaccurate Information

If your loved one dies within two years of setting up the life insurance policy, the insurance company can contest the policy itself. This contestability often hinges on the policyholder allegedly supplying inaccurate information regarding required information like the following:

• Age 
• Weight
• Income
• Smoking history 
• History of alcohol and drug use
• Overall health, including any preexisting or chronic physical or mental health conditions
• Hobbies
• Criminal history

Some insurance companies don’t hold back on putting in a considerable amount of effort in relation to contestability.  

Reason 2: Failure to Submit a Waiver of Premium

Many life insurance policies come through the policyholders’ employers, and this coverage often extends to family members as well. When the employer fails to fulfill their responsibility of accurately explaining the policy to employees or fails to fulfill their responsibility of following through with the requirements necessary to maintain the coverage, it can lead to policy denials. 

Reason 3: Nonpayment of Premiums

A common reason for life insurance claim denials is the policyholder’s failure to pay premiums. When this is the case, you – as the beneficiary – have the right to know the following relevant information:

• Whether the insurance company sent the required premium-due notices to the policyholder’s correct address 
• Whether the notices the insurance company did send clearly warned the policyholder that a lapse in coverage was imminent, which is a requirement.
• Whether the insurance company was required to notify you, as the beneficiary, of imminent lapse of coverage, and if they did so.

Reason 4: No Beneficiary Identified

When a policyholder fails to include a beneficiary, it’s generally related to oversight. When a policyholder dies without a beneficiary listed, the matter is usually determined by either the state’s laws of inheritance or the terms of the policy, but you should expect significant delays. 

Reason 5: Policy Exclusions

The basis for denial that is litigated most often is the insurance company’s determination that an exclusion in the policy applies to the cause of death.  These exclusions are often not well defined. For example, questions often arise about whether or not a drunk driving accident was actually an “accident” or was foreseeable. Does an exclusion of deaths caused by alcoholism include if you die at any time while intoxicated? If the decedent fell, hit his head and drowned in the bath because of tremors caused by Parkinson’s disease, is that an accident or was the death due to the illness, which may not be covered if the policy is limited to accidental death only? These are the types of denials that insurers routinely make, and that courts can overturn.

You Need an Experienced Life Insurance Claim Attorney on Your Side.

Life insurance policies play a key role in the estate planning that many people turn to in relation to their legacy, which includes continuing to care for loved ones. When a life insurance claim is denied, it’s a refusal to carry out the wishes of the policyholder, which makes the issue that much more important. The accomplished life insurance claim attorneys at Monahan Tucker Law are well-equipped to skillfully protect your rights in response to a life insurance claim denial, and we’re standing by to help. 

To learn more about what we can do for you, please don’t hesitate to reach out and contact us today.