When you’re grieving the loss of a loved one, a denied life insurance claim is the last thing you want to deal with. Unfortunately, insurance providers reject claims all of the time. It’s important to understand why this happens and what steps you can take to strengthen your claim for benefits.
Life insurance policies vary from plan to plan. You should review the details of the policy to ensure all of the necessary paperwork is in order. You may need to provide a death certificate and other evidence that you are the intended beneficiary. The good news about paperwork errors is that they are relatively easy to correct. However, they can significantly delay the claims process.
The claim falls within the contestability period
If someone purchases a life insurance policy and passes away two weeks later, you’d expect an insurance company to be skeptical. However, most policies contain a “contestability period” that lasts for up to two years. In other words, if a policyholder dies within two years of taking out a policy, the insurance company is more likely to deny your claim.
The policy has lapsed or there are overdue premiums
The policyholder is required to make occasional payments, or premiums, to keep a policy active. Failure to keep up with a payment schedule could cause a policy to lapse. A lapsed policy will never be resolved in your favor. If payment issues are a concern, it’s best to address them while the policyholder is still alive.
The cause of death isn’t covered
Exclusions are the bane of any policyholder, regardless of the type of policy. Life insurance policies are no exception. An insurer may claim that the cause of your loved one’s passing falls out of the policy’s defined coverage. You will want to double-check the language of your policy if this is the reason for the denial.
What are your next steps?
An initial denial of a life insurance claim is not necessarily the final word. You have the option to appeal a denied claim. You should always discuss your options with an experienced legal professional.