Common Reasons for Life Insurance Claim DenialsThere are a variety of reasons why a claim for life insurance benefits might be denied. Some of the most common reasons for a claim denial include the following:
- The insured individual passes away within the first two years of the policy, and the insurance company insists that the policy contains material misrepresentations – Whenever someone applies for life insurance, he or she must answer questions about his or her health, weight, age, income, and prior criminal history. The insurance company could deny a claim for benefits if it later uncovers additional information that does not match the information contained in the policy answers. The alleged misrepresentation, however, must be material for it to justify a claim denial.
- The employer fails to do something – Many employees pursue life insurance benefits through an employer-sponsored group plan. However, the employer may not properly represent certain information, which could result in a loss of benefits following the insured’s death.
- Premium lapse – In most cases, a life insurance policy only remains active during such time as premiums are being paid. If a covered individual misses a payment or fails to pay his or her premiums, it is likely that the policy will lapse. Insurance companies routinely use these premium lapses as a basis for denying coverage when the need arises.
- Exclusions – Insurance companies are typically very precise about certain instances or situations that the life insurance policy does not cover. If your situation fits into one of these exclusionary provisions, the insurance company might try and use the exclusion as a basis for denying the claim.