Losing a loved one, whether by surprise or after a long and arduous battle with an illness, is one of the most difficult situations people face in their lives. While dealing with the shock and grief, you will need to make many decisions and plans. During this time, you might learn or remember that your deceased family member named you as their beneficiary. As the beneficiary, you stand to receive the benefits of their policy.
Since your loved one diligently paid their policy premiums, filing a claim, having it promptly processed, and getting it approved should be relatively straightforward. Sadly, for many beneficiaries, it’s not. Many claimants experience unnecessary delays or wrongful denials. Suppose you’ve received a denial of your claim.
In that case, it’s essential to get an experienced insurance attorney on your side as soon as possible. With solid legal representation, you can fight for the benefits you rightfully deserve, as your loved one intended when they named you as their beneficiary.
Why Insurance Companies Deny Life Insurance Claims
It’s common for life insurance policies to include contingencies that could void the coverage. A life insurance claim may receive a denial for many reasons. The good news is that you can file a denial dispute and possibly still receive the benefits.
One common reason insurance companies deny claims is premium delinquency. This occurs when the policyholder doesn’t pay their premiums when they are due, leading to a lapse in coverage. They may not have intended to let their policy expire; it may have happened due to an oversight or even by accident.
Material misrepresentation on the initial policy application is another reason the insurance company might deny a life insurance policy claim. For instance, the insurer could deny the claim if the policyholder didn’t disclose a serious health condition or lifestyle risks such as a history of smoking or otherwise using tobacco, a heart condition, diabetes, or other chronic conditions. Additionally, if they didn’t share their total income or disclose other life insurance policies, a claim might be invalid.
Insurance companies can also deny these claims if the policyholder dies outside the covered time frame. Under some policies, the insurance carrier can deny specific claims for the first several years of the policy’s effective date. Claims involving the decedent committing suicide or dying while doing something illegal are two examples of this. Most life insurance companies have this contestability period to help avoid cases of insurance fraud.
Some life insurance benefit claimants fail to provide the required paperwork necessary for death benefit approval. At a minimum, insurers have to receive a death certificate to start the payment process. Ensuring that you are providing the insurer with all the necessary paperwork and documentation from the beginning can decrease the time it takes to process your claim and the chances of a claim denial.
Life insurance companies have their own specific process for determining if a policy is still valid and effective when the policyholder dies. They also decide whether they should pay the benefits to the named beneficiary and/or the policyholder’s heirs.
Suppose the deceased’s beneficiary or family has gone through the correct and necessary steps to claim the life insurance benefits. Then the insurance company denies the claim. In that case, it’s in their best interest to contact a seasoned lawyer as soon as they can. You should receive a denial letter that gives the reasons the insurance company denied the life insurance claim. If the denial letter doesn’t include any denial reasons, your attorney can ask for additional information regarding why they rejected the claim.
In fact, with the help of your lawyer, you can appeal the denial and request more information about why they denied it. It’s crucial to note that there is typically a deadline to appeal. Many insurance companies only provide beneficiaries 60 days to file an appeal after a denial.
What if the Insurance Company Said You Couldn’t File a Claim?
Sometimes insurers disallow beneficiaries to even file a life insurance claim. This typically happens over the phone.
Representatives might tell you things like:
- “The policy lapsed, and no coverage exists.”
- “It was not an accidental death, and there’s no coverage available as this is an accidental death policy only.”
- “Group coverage ended because you left your job.”
- “You don’t have the right to file a claim because you are an ex-spouse.”
Far too often, the insurer’s representatives mistakenly verbally deny rights to file a claim, disallowing perfectly valid life insurance claims. If a life insurance representative informs you over the phone that you don’t have the standing to file a claim, be sure to speak with a well-versed life insurance lawyer instead.
Can the Department of Insurance or Insurance Commissioner Fight the Denial for the Beneficiary?
Unfortunately, no. Your state’s department of insurance doesn’t have the standing to fight a denied life insurance claim. Some denied claimants waste valuable time by filing a complaint against the insurer with their state’s department of insurance. The department can’t force any insurance company to pay a claim. You need to take the denial up with the insurance company.
Fighting a Denied Life Insurance Claim
If you need to fight a life insurance claim denial, don’t delay in taking the following steps. If your deadline to appeal the denial passes, you won’t have any recourse.
#1. Review the Denial Letter
Take the time to review the denial letter you received thoroughly. Ensure that it states precisely why the life insurance company denied your claim. If it doesn’t, you or your attorney should request more information from the insurance company right away. Was it denied based on information the insurance company reviewed? Was it denied based on state law?
Understanding why the insurance company denied the claim will help identify other steps you need to take to fight the denial. Not all denials entail the same steps for appealing.
In addition to a reason why they denied the claim, ERISA denial letters should also detail:
- The specific life insurance policy provisions on which they based the denial
- What documents they reviewed to deny your claim
- Any additional information your appeal should include for the insurer to reevaluate the initial claim
- How to correctly submit your appeal
- The deadline for filing an appeal
- Details about your rights as an ERISA beneficiary to file a lawsuit to receive the proceeds
#2. Identify the Policy Type
You will need to find out if your loved one purchased their life insurance policy through an employer benefit program or individually. Policies issued through an employer only fall under federal insurance laws, known as ERISA rules. These rules are extremely specific when it comes to appealing denied claims. For example, only a single appeal of an ERISA denied claim is permitted.
#3. Compare Application Questions with the Denial Letter
Sometimes denial letters will state, for example, that you answered “yes” to a question when you really answered “no.” If your denial letter mentions your answers to specific questions, be sure to go back and review your application. Compare your answers with what the denial letter states. Insurers are known for making mistakes in their claim decisions, so you must advocate for yourself.
#4. Organize Paperwork
Collect and save any written correspondence the insurer sends you regarding your claim. This includes letters and other documents you sent to the insurance company throughout the claim process. It also includes all insurance company correspondence you have received. Keeping a file of all correspondence with the insurer can help your appeal be more successful. It also makes the appeal easier on you and your lawyer since you know where you can find everything
#5. Refrain from Writing the Insurer a Complaint Letter
It can be quite tempting to write a complaint letter to the life insurance company. However, under ERISA, this type of letter can be classified as an appeal. You only have one chance at an appeal. Suppose the letter just talks about your frustration but doesn’t provide substantive reasons for an appeal. In that case, the insurance company has the right to uphold its claim denial. In this case, you waste your opportunity to appeal. Subsequently, your only other option will be filing a civil lawsuit.
Likewise, beware of what you say to the insurance company over the phone. If you call them and say you “want to appeal the denial of benefits,” the insurer can consider your words as an appeal and will begin the review process right away. If you decide to file a formal appeal later, the insurer won’t accept it. Ensure that you clearly tell them that you intend to file an appeal soon. For now, you just want to get the life insurance policy and other relevant records to prepare a comprehensive appeal.
#6. Prepare Your Appeal
Once you know why the life insurance company denied your appeal and you have the necessary documentation, you can prepare your appeal. Be sure to address the specific reasons for the claim’s denial.
You need a lawyer who knows:
- You should include each piece of information you would want to use in a lawsuit in the record for the appeal.
- If you leave out any information, a court will never consider it.
- It typically takes a life insurance company about 60 days to review an appeal. The insurer is required to provide you with a written notice if there is a delay in considering your appeal. Occasionally an appeal review is performed by a board of trustees or a committee that meets at least quarterly, which means an appeal decision may take as long as 120 days
- When the insurance company decides your appeal, they will notify you of the reason and plan rules they used to make their decision.
- Unfortunately, if they deny your appeal, you can’t file a second appeal.
Ensure your appeal includes the following:
- New evidence such as documentation, medical opinions, legal briefs, and research and expert reports
- The insured’s complete file, which may include the life insurance policy, expert opinions, medical records, doctor’s notes, internal email/call logs, videos, and recorded phone calls
- Pertinent ERISA requirements
- Other doctor statements if the denial arises from the medical history of the deceased
- Affidavits from family and friends who are aware of the policyholder’s health, medical condition, or situations and can help support your reason for appealing
#7. What if Your Appeal Receives a Denial?
If your appeal received a denial, you can’t appeal again. However, all hope is not lost. Under ERISA mandates, you have the right to file a lawsuit once you’ve exhausted all administrative remedies. Suppose the insurance company denied your initial life insurance claim and the appeal. In that case, you or your insurance attorney can file a lawsuit in pursuit of the benefits that are rightfully yours.
Federal courts typically handle ERISA lawsuits. Even if you file a life insurance denial lawsuit in a state court, that court will usually transfer it to a federal court in the same state because ERISA issues fall under federal laws. ERISA preempts state law claims. You should also note that you or your long term disability insurance attorney must file an ERISA case within a particular deadline detailed in the plan documents.
If you win your lawsuit, you are entitled to receive the entire life insurance benefit and attorney fees. Unlike other civil cases, you cannot collect damages in an ERISA lawsuit. However, the court may assign pre-judgment interest to the total amount you can receive.
Hire An Insurance Dispute Attorney
Suppose your life insurance policy wrongfully denied your benefits. In that case, a seasoned insurance attorney can help you explore your options and represent you moving forward. These types of cases are incredibly complex. Often, insurance companies deny appeals if they don’t contain any legal briefs, which an attorney can provide. Don’t risk your claim at this difficult time of life; enlist the help of a lawyer to ensure the best outcome possible.
Following graduation from Loyola Law School in New Orleans in 1990, Price McNamara served as a Federal Judicial Law Clerk to the Honorable John M Shaw, Chief Judge, United States District Court Western District of Louisiana.
Mr. McNamara founded the Law Offices of J. Price McNamara, and began putting his past experience to work for the injured and disabled clients he now represents against the insurance companies in personal injury and long term disability and other insurance disputes in both federal and state courts