Why Does Life Insurance Get Denied?
After a loved one passes away, the last thing a surviving family member wants to deal with is bad news from a life insurance company. Unfortunately, life insurance companies deny claims all the time – sometimes for valid reasons, other times for no reason at all. If you’ve recently received a claim denial from a life insurance company, reach out to an insurance bad faith attorney in Phoenix right away. You may be able to appeal the denial and receive the benefits you believe the company owes you.
Contractual Obligations and Life Insurance Benefits
A life insurance policy is a legally binding contract between the policyholder and the insurance company. This means that if you breach your contractual obligations in any way, the insurer has the legal right to deny your claim. Even if the policyholder wasn’t trying to scam the insurer, she might accidentally misrepresent facts or do something else to lose the right to insurance benefits. Life insurance companies don’t take breaches of contract lightly, and will take any opportunity to deny a claim. An insurance company may also investigate your case if it suspects an insurance scam.
You can reduce your chances of a claim denial by thoroughly reading your insurance policy and contract before signing. Fill out your application completely and honestly. There is no room for guesswork in this contract. Provide accurate information and be as truthful as you can. When in doubt, show your policy to an attorney before signing on the dotted line. Understanding the most common reasons for denied claims can also help you avoid this problem.
Common Reasons for Insurance Claim Denials
A denial letter from a life insurance company will state the company’s reason for denying your claim. Often, this reason is in industry jargon that you may not be able to truly understand. Take your claim denial letter to an attorney who specializes in bad faith for an in-depth discussion about its contents, and to find out if the insurance company is illegally trying to get out of paying you for the death of a loved one. There are many common reasons a life insurance company will try to give for claim denials, including:
- Material misrepresentation. You may receive this notice if the company has discovered information about the decedent that was not on the initial application for insurance coverage. This information could be as minor as the individual used to smoke years ago. The insurance company can take this opportunity to deny the claim on the grounds of misrepresentation, or that it would not have offered coverage if it had known this information.
- Lapse in coverage. You may have accidentally had a lapse in coverage, or a gap in your payment of premiums. In this case, the law would justify the insurance company in denying the claim since you broke the terms of the agreement.
- No beneficiary. If the policyholder failed to name a beneficiary, the insurance company can stall payment or deny a claim. The insurance company cannot legally keep the benefits, but the process for getting them can be long and drawn out.
- Policy exclusions. It’s possible your policy excludes certain types of deaths. If the insurer denied your claim for this reason, ask for more information. Exclusions are often vague or ambiguous, and may provide the opportunity for an appeal.
There are several other reasons a life insurance company may deny a policyholder’s claim. No matter what reason for the denial, talk with an attorney who specializes in cases of bad faith. The company may have made a mistake, or it may be possible to appeal the insurer’s decision. If you believe you rightfully deserve insurance benefits, don’t take no for an answer without discussing your case with an attorney. If you would like to talk with an experienced bad faith insurance attorney in Phoenix Arizona, contact the office of Charles Surrano today for a consultation.