What Are the 4 Most Common Reasons Insurers Deny Life Insurance Claims?
If you have a life insurance policy to provide your loved ones with financial benefits after your death, it’s important to do what you can to ensure they get everything they’re entitled to. The best way to do this is to learn the most common reasons for rejecting claims and take steps to avoid these issues. Consider the top four reasons for insurance companies to deny life insurance claims.
Did the Death Happen During the Contestability Period?
Insurers in Pennsylvania are allowed to have a two-year contestability period. During this time, your insurer will look into the details of any death that occurs. This may mean they heavily scrutinized your application to ensure it was accurate. They could deny the claim if they find anything misleading, or even if your death is ruled a suicide since this could indicate that you only bought insurance to allow your family to collect money after your death.
Was the Type of Death Covered?
When you sign up for your policy, you should review it to find out if any causes of death are not covered. For most policies, natural causes of death are covered. But if you die while performing a risky hobby or committing a crime, your death might not be covered, depending on your policy. On the other hand, if your death is considered a murder, it will be covered as long as your beneficiary is not suspected of homicide. Additionally, suicide is typically covered after the two-year contestability period is over.
Were the Premiums Current?
Another reason for claim denial is when the policy lapsed because the latest premium wasn’t paid. If your premium is late, you may get a brief grace period and a reminder from the insurance company to pay. But if you ignore it or don’t get this notice, the policy could end, which may be a shock to your family after you pass away. You can prevent this issue by automating your payments.
Were You Completely Honest on the Application?
One of the most preventable problems with life insurance is dishonesty on the application. Simply put, if you lie or leave out important details, you might get a policy that you pay premiums on for years, but the claim could be rejected once you pass away and the insurer realizes you lied. Therefore, it’s best to be honest about your medical conditions. You also need to disclose any dangerous hobbies you enjoy or risky jobs you do. This will allow you to get a life insurance policy that truly protects your family in the future.
If you have questions about the legality of a policy or want to ensure your life insurance company isn’t violating your rights, contact an attorney with experience handling claims like yours. Contact our law office in Philadelphia at
(215) 940-8900 today to learn how we can help.
