Life insurance is a contract between the insurance company and the policy holder. When the policy holder passes away, the named beneficiary must file a claim with the insurance company in order to collect the benefits. In many cases, these benefits are needed to cover burial expenses and may even be needed to cover daily living expenses for dependant family members. If an insurance company denies a claim without a justifiable reason, insurance attorneys may be able to assist beneficiaries in recovering rightfully due benefits.
Reasons for Claim Denials
The most common reason for a life insurance claim denial is that the insured made a misstatement that would have lead to a denial of coverage if stated. In many cases, it is found that insurance representatives do not clearly state what types of health problems will result in a denial of coverage. However, when a life insurance claim is filed the insurance company closely examines policy conditions and will deny a claim based on non-compliance with requirements. If a policy beneficiary believes that the insurance company was not forthright in outlining what conditions would result in a claim denial, an insurance attorney may be able to help the beneficiary contest the insurance company’s decision.
Cause of Death not Covered
Life insurance companies may state that the reason for death was not under the covered reasons for death. Some insurance companies may not cover accidental death and others will only cover accidental death. Most companies do not cover death by suicide. Life insurance companies and policies may also vary in other covered reasons for death, so policy holders should be careful when selecting a policy and beneficiaries should pay close attention when reviewing policy details. The details of the case may dictate whether it is possible to contest a claim denial based on causes of death that were expressly stated not to be covered under the life insurance policy.
Death Shortly Following Policy Purchase
Insurance companies may delay claims while investigations are performed if an insurance policy was purchased very shortly before the policy holder’s demise. Based on the results of the investigation, claims may be approved or denied. If the claim is denied based on unproven suspicions simply because of the timing of the policy purchase, beneficiaries may be able to recover compensation with the help of an attorney. An attorney may also help to speed the claims process along if claim payment is being delayed due to unfounded suspicions.
Underpaid Life Insurance Claims
Claims may also be underpaid with the insurance company reasoning that the deceased was not entitled to supplemental life insurance, even when the additional coverage was purchased. Insurance companies may state that the proper forms were not filled out or needed documentation was not submitted. In these cases, attorneys will help beneficiaries compile documentation to show that the company allowed the policy holder to pay premiums for the additional coverage without informing the policy holder of the needed changes or information.
Attorney’s Assistance with Claim Filing
In some cases, life insurance companies will deny a claim because of filing errors or missing forms. In these cases, it may be possible to make corrections and resubmit a claim. Hiring an attorney to oversee the process from the beginning may help beneficiaries to avoid filing mistakes and speed the claims process. If a life insurance claim is denied, hiring an experienced life insurance attorney may help to ensure a greater likelihood that the claim will be approved when an appeal is filed.
Bad Faith Claims
Most insurance claim denials are based on a misunderstanding or disagreement between the beneficiary and the insurance company. However, there are some cases where the insurance companies intentionally mislead a policy holder to make a sale, knowing that a life insurance claim would be denied. If it can be determined that the insurance company acted in this unethical manner, it may be considered a bad faith claim. Insurance companies that are found to have acted in bad faith may be ordered to pay punitive damages in addition to stated life insurance policy amounts to discourage the company from future misconduct.
“360 Degrees of Financial Literacy.” Claiming Life Insurance Benefits. The American Institute of Certified Public Accountants, 1 Jan. 2014. Web. 1 Nov. 2014. <https://www.360financialliteracy.org/Topics/Insurance/Life-Insurance/Claiming-Life-Insurance-Benefits>
“How Do I File a Life Insurance Claim?” Insurance Information Institute. Insurance Information Institute, 1 Jan. 2014. Web. 1 Nov. 2014. <http://www.iii.org/article/how-do-i-file-life-insurance-claim>
Turchin, Jason. “Life Insurance Benefits: Applications, Exclusions, Denial and Payment.” HG.org. HG.org, 1 Jan. 2014. Web. 1 Nov. 2014. <http://www.hg.org/article.asp?id=28311>