Nothing can make ready you for the death of someone you love dearly. if you’re a beneficiary of that person’s life insurance policy, at least you can use the policy’s tax-free proceeds for settling their affairs, payout any debts that set up them, and change the income they’ll no longer earn — if the life insurance company confess your death claim, that is.
It’s true that life insurance companies accept mostly death claims. But it doesn’t accept them all, and the process is so far from a formality.
Insurers refuse life insurance claims for all sorts of legal and not-so-legal reasons, from nonpayment of premiums to death by suicide in the policy term early. If your loved one’s insurer refuses your claim, you need to understand your rights and decide what should do next.
If You’re Life Insurance Claim Is Denied What Should Do?
The death of a loved one is a life-altering event already. Left denied, a denied life insurance claim can be life-altering also, at least in a financial sense.
Fortunately, life insurance rejections aren’t always final. You’re within your rights for requesting the insurer’s decision, and if you create a persuasive case, you could get it reversed.
Follow these steps to assess your denied claim and pursue your appeal.
1. Life Insurance Claim Denies for Common Reasons, Life Insurance Companies Deny Claims
Life insurance companies typically inform beneficiaries of reject claims via an official snail-mail letter. If you made an online account as part of the claims-filing process, your loved one’s insurer might send also the notice via secure electronic message.
If for a few reason you don’t get an official notification, request it.
Read this letter carefully. Search for a clear explanation of the insurer’s reason for denying the claim.
It’s understood the reason or reasons for the denial. Depending on the situations, there may be some you can do for changing the insurer’s mind — or you might have a strong case on appeal.
These are some of the common reasons your life insurance company can deny your claim.
The Policy Ended Due to Nonpayment
Nonpayment is one of the major straight forward reasons a life insurance company can reject an else valid claim. If the payment is stopped the policy and didn’t reinstate it while the grace period — which typically lasts 30 to 45 days from the last payment due date — then the insurance company is its rights to cancel the policy.
Unfortunately, you won’t know that this happened until you have approach to the policyholder’s online account or some other proof
of cancellation, such as an occupied letter from the insurer. But the insurer’s claim rejection letter should clearly state that the policy lapsed.
The Policy’s Term Ended
Outlast a life insurance term is other simple-minded reason for a denied life insurance claim — and one probable to leave you with no recourse. If you’re loved one had a 20-year term life insurance policy and lived for 25 years after it went into effect, it’ll long since expired at their death.
Improper Death Documentation
Every U.S. person’s death must have a corresponding death certificate. Under normal situations, state records offices produce death certificates quickly after the hospital, medical examiner’s office, or other authorized organization declares the death.
Often, it takes longer to make a death certificate. For example, if the policyholder died foreign, reporting and recording the death is extra complicated. This is true for people who go missing. Without identify remains, it’s not so easy to declare a death.
In any incident, the life insurance company requires a valid death certificate for approve a claim. If you just didn’t submit one the first time, resubmitting one with your appeal must solve the problem while there are no other issues. If questions about the death certificate’s authenticity are there or it’s not possible to get one, you may necessity to submit other documentation, such as a medical examiner’s report.
The Policyholder Misreported Something on the Life Insurance Application.
If the life insurance company deem the policyholder lied on their application, they could deny to pay the death benefit. They might return any premiums paid on the policy still, but that’s likely to be a little fraction of what you thought you were entitled to.
The insurance carrier is more likely to enquire the policyholder’s application while the contestability period, which runs for two years from the date the policy’s effective date.
While the contestability period, the insurer has the right to look into the policyholder’s application and situations of death even if it has no cause to suspect funny business. These investigations usually turn up proof of misrepresentations or outright fraud, resulting in rejected claims. Even in the best-case scenario, they reject payouts by weeks or months.
Faults or lies that can jeopardize a life insurance payout include:
Failure to reveal a medical condition correlated with premature death
Failure to disclose an unhealthy habit, such as smoking
Failing to disclose a parlous occupation or hobby, such as working as a wild land firefighter or hang-gliding
Failing to disclose past convictions for high-risk criminal activity, such as reckless driving or driving under the influence
These faults are known as “material misrepresentations.” They can result in a rejected claim even if they didn’t payment into the policyholder’s cause of death because the insurer might have refused the application in the first place if it had the policyholder’s full risk profile.
The Policy Omitted the Cause of Death
A few life insurance policies exclude specific causes of death, such as injuries sustained in active war, during participating in extreme sports, or while engaged in unlawful activity. If the policyholder died for any reason that’s especially ruled out in the policy, the insurer is within its rights to refuse the claim.
Mostly life insurance policies also have a “suicide clause” that permits the insurer to deny claims on death by suicide while the first two years of a policy. If your loved one died by suicide 18 months after their policy went into impact, there’s a good chance the insurer will refuse the claim.
2. Collect Documentation
If the policy lapsed because of non-payment months or years before the policyholder died or the policy term finished long ago, your options are limited. Because the policy is no longer valid, the insurance company isn’t compelled to pay the death benefit.
If the policy had a return-of-premium rider, you might be entitled to get the premiums paid by the policyholder. But that’s all you can expect.
If the policy was still in impact when the policyholder died, you might have grounds for appealing. You need to collect evidence for prove your case, though.
That proof can include but isn’t limited to:
- Any medical records incidental to the policyholder’s illness, death, or both
- An official autopsy report
- An official law imposition report if the police investigated the death
- As much payment history for the policy as possible, it may be payment receipts or bank records
- A certified copy of the death certificate
Depending on the type of policy your one hand, you may have a much limited time to appeal. For example, you may have few 60 days from the date of the rejection for appealing a group life insurance policy denial.
3. Appeal the Rejection
Next, prepare and submit your appeal.
You may do as yourself at no out-of-pocket cost. Contact the life insurance company’s file claims, department and tell them you’d like to appeal the refuse. They’ll put up you how to do that, typically by calling an exclusive phone number or using the company’s online claims portal.
When you apply, submit all the supporting documentation you’ve generated, although you already submitted similar or identical documentation. You can’t be certain the insurance company will combine your claims, and if they don’t, your second claim could end up being incomplete. That could be lead to a second rejection.
4. Bring in a Third Party if Needed
When you submit your claim, the insurance company will analysis the new information and decides whether it rejected your first claim in error. If that’s the case, you’ll early get some welcome news — that the claim has been assumed and the death benefit is on its way to your bank account.
But what if the insurance company doubles down on its refuse? Or you decide you necessity more support before filing your appeal in the first place?
You have two options: file a complaint with or request for auxiliary from your state’s insurance department or hire a private agent who specializes in fighting life insurance refuses.
Contact Your State’s Insurance Department
If you think the life insurance company refused your death claim in bad faith, gets your state’s insurance department communicating. It is known as an insurance commission also, this agency’s work is to protect the financial attentiveness of consumers and businesses who enter into insurance contracts.
You should be able for filing your complaint online. At few point, a case manager will follow up with you for getting more information and talk about next steps.
Just don’t look for a quick resolution. Your state’s insurance department maintains lots of consumer complaints and is just about certainly understaffed, so it could take months or years for resolving your complaint. If your complaint is used as the basis for or is added to a legal action against the insurance company, a settlement is likely years off.
Hire a Life Insurance Lawyer
Instead of to contacting your state’s insurance commission, you can hire an insurance agent who specializes in contesting refused life insurance claims. They’ll help you to get ready and submit your appeal, directly communicate with the insurer for you, and negotiate a resolution.
Again, there’s no assurance of success, but involving a lawyer does strengthen your case. Certainly, you’ll have to pay for their help — most work on eventuality, meaning they’ll receive anywhere from 33% to 40% of your eventual award.
On the “bright” side, they don’t take paid if they can’t get the rejects reversed.
Many working-age adults necessary life insurance. If you and your spouse or partner have a policy, perhaps it’s because you’d depend on the death benefit to fulfill your needs meet if one of you died early.
A refused life insurance claim rips away that assurance, adding to the wound of what’s certainly to be a dark period in your life already. The good news is that it’s possible to request a refused life insurance claim — and though the procedure offers no guarantees, such appeals are usually successful.
At any time should you need to file a life insurance claim, let’s think you’re among the extensive many of beneficiaries who do so with no issues? But if not, it’s good for knowing you have options.
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