Lydia was devastated after the sudden and unexpected death of her husband, Jack. After 36 years of marriage, she was, of course, unsure of how to cope without him; emotionally and financially. As the primary breadwinner of the home, Jack’s income was key to the couple’s future stability. Lydia was now dependent on the life insurance that they carried on Jack and so it came as a horrifying surprise when the insurance company denied the claim. According to the adjustor, Jack lied about an underlying health issue on his application and therefore voided his own policy. This was especially confusing to Lydia considering that Jack died in a boating accident and the cause of death was listed as accidental drowning. Unfortunately, the insurer acted completely within its rights.
Though Lydia’s case is unusual, it is not unheard of. If an insurance carrier deems that the insured violated the terms of the policy, in any way or manner, it can legally pay the beneficiaries nothing. The most common reasons insurers use for denying benefit claims include:
- The death occurred during the contestability period. Generally lasting two years with most life insurance policies, the contestability period gives the insurer an out in terms of having to pay on what would be a fairly new policy. This two-year period is often used by the insurance company to investigate the claimant’s information; determining if the background, health and personal information was true and correct. The company can use any misinformation to deny the claim.
- The policy doesn’t cover the cause of death. Those activities that carry a high risk of death with them are often excluded from beneficiary claims for benefits. If a spouse dies while scuba diving or base jumping, it is not likely that the surviving partner will see any insurance payouts. Many insurance companies also see death by suicide as a reason to deny claims.
- A claimant’s failure to disclose pertinent information – Like in Lydia’s case above, those who lie about their health history, criminal investigations or a history of drug or alcohol abuse, are often leaving the surviving members of their family vulnerable to benefit denial.
- A failure to pay the insurance premiums – Of course, a lack in paying for a service usually results in the dissolution of that service; the same goes for insurance benefits. Though most policies are backed by a 30-day grace period, most insurers will void the policy if they are unable to collect the premiums after a certain period of time.
If you feel that you’ve been unfairly denied of life insurance benefits, it is imperative that you first contact the insurer. When you find that help is not forthcoming, we recommend that you contact a lawyer who specializes in insurance benefit denials. At ERISA Law Center, we are nationally recognized for fighting insurance companies, winning claims for our clients and getting them the benefits that they deserve. Find out how our Erisa attorneys can help you and your family now.