You planned ahead and got life insurance to provide financial protection for your loved ones. A life insurance denial is not part of your plan, but it can happen. Sometimes insurance companies refuse to pay out, life insurance claim denials are crucial to understand. Understand the reasons for life insurance claim denials. The knowledge ensures you choose the right policy. Right policy instills confidence that your loved ones will receive the financial protection you’ve planned for them. Additionally, familiarize yourself with the options you have if a life insurance denial happens, as we’ll discuss below.
What are the top 5 reasons for a life insurance denial?
1) False information in the life insurance application
The insurance company can deny a life insurance claim if the policyholder misrepresents, withholds, or omits important information. In the insurance application details given should be correct. Examples include lying about your age, withholding the fact that you are a smoker, or failing to disclose a pre-existing condition like depression or diabetes.
2) Policy exclusions
Life insurance policies often exclude coverage for certain types of deaths or other circumstances. Common exclusions include death caused by suicide, drug overdose, illegal activity, and specified hazardous activities (e.g., skydiving, bungee jumping). Every life insurance policy is unique. It is so important to read and understand the exclusions in your specific policy. If death is caused by factors excluded by the policy, the insurance company will deny the claim.
3) Expiration of term life policy
Term life insurance policies provide coverage for a specific period of time, known as the policy term (e.g., 5 years, 20 years). If you outlive the policy term and don’t renew coverage before it expires (assuming renewal is an option), the policy will lapse. The insurance company will not pay out if you die after the policy term has expired.
4) Non-payment of premiums
A life insurance policy can lapse due to non-payment of premiums. Once you miss a certain number of payments (set out in your policy), the insurance policy will lapse and no longer be in force. If you die while the policy is lapsed due to missed premium payments, the insurer can deny the claim.
5) Fraud
The insurance company will deny a life insurance claim if fraud is suspected. Fraud in this context means intentionally providing false or misleading information to obtain insurance or to receive a death benefit from a life insurance policy. Examples of insurance fraud include lying on the insurance application (e.g., providing false information about your health or hiding a pre-existing condition), providing false information about the cause of death, and staging or faking death.
Options when life insurance denial happens
It may be possible to contest or appeal an insurance denial or reinstate a cancelled policy. For example, if the reason is non-payment of premiums, it may be possible to appeal the denial or reinstate the policy by making up missed premiums.
If your life insurance claim is denied, you must carefully review your policy and the written reasons for the denial. Additional documentation or evidence such as medical records, police records, or an autopsy report will be needed to strengthen the appeal. You should also consider seeking legal advice to contest the denial of a life insurance claim.
Contact https://simpsonthomas.com/contact/ or call 604-689-8888 Simpson Thomas & Associates. Speak to a lawyer today if you are facing a life insurance denial.
About Simpson Thomas and Associates:
STA is a prominent law firm, with a rich history of over 50 years. It is based in the lower mainland with offices in Vancouver and Surrey.
The firm is active in various practice areas. Namely, personal injury, family law, immigration, employment law, estate litigation, and insurance denials.
STA commits to serving the community with its legal expertise. Also, actively support causes that enhance the well-being of individuals and families.
Reach out and consult with us:
Adam Ueland, Lawyer,
Phone: (604) 689 – 8888
Email: [email protected]
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