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Dawson and Rosenthal
Dawson and Rosenthal

Common Reasons For a Life Insurance Claim Denial

When you purchase a life insurance policy, you do so with the full expectation that the proper benefits will be paid out after the insured passes away. However, there is a chance that a claim may be denied to the beneficiary. Here, we want to examine some of the most common reasons for life insurance claim denials. We also want to discuss what you can do if you suspect that a life insurance claim denial was made in bad faith by the insurance carrier.

1. The death occurred during the contestability period

If the insured individual died within the first two years from the date the life insurance policy became effective, the insurance carrier will have the right to contest the policy. When a person obtains life insurance, they are generally asked to answer various questions about their age, health, income, hobbies, criminal history, and so forth.

If a person dies during the period of contestability, the insurance carrier will likely investigate the insured’s medical records and background information. If their findings are not reflective of the information provided by the insured, this could lead to a denial of coverage.

2. The type or cause of death was not covered in the policy

As harsh as it sounds, every life insurance policy is going to have several exclusions that describe what the policy will not cover. This often means that various types of death are not included in the policy. In general, a life insurance policy may have exclusions focused on the following:

  • Death due to suicide
  • Death due to drug or alcohol abuse
  • Death due to homicide
  • Death due to illegal activities
  • Death due to extreme or dangerous hobbies/activities

3. The insured failed to disclose relevant personal information

One of the most common reasons that life insurance carriers deny benefits is if the insured failed to properly disclose accurate information about their history. For example, dishonest information about smoking history or history of DUI convictions could be grounds for a denial of life insurance. However, failing to disclose relevant personal information will be particularly important in deaths that occur during the contestability period.

4. The policy premiums were not paid

It goes without saying that all insurance policies are only active as long as the premiums are paid. If a life insurance policyholder does not pay their premium when it is due, the policy could lapse and/terminate.

5. There is no beneficiary designation on file

If the insured individual has not named a beneficiary in the policy, this could create significant complications when it comes to paying out the benefits. If a beneficiary is not named, then the life insurance policy will have to proceed according to the laws of the state where the policy was taken out to determine who receives the benefits.

6. The beneficiary was changed after a divorce

Anytime a person goes through a divorce, it may be necessary to change the beneficiary of an insurance policy. While many states automatically revoke a former spouse as a life insurance beneficiary, there are various exceptions to these laws.

If You Suspect Bad Faith in Your Claim Denial – Contact Us

If you suspect that your life insurance claim denial was a result of bad faith on the part of the insurance carrier, contact the attorneys at Dawson & Rosenthal as soon as possible. Our team has extensive experience handling complex insurance claim denial cases, and we understand what it takes to fully investigate what happened. Our goal is to help ensure that you recover your rightful benefits. We will investigate any possible incident of insurance bad faith to determine what happened and stand up for your rights. If you or a loved one is in need of an insurance bad faith lawyer, you can contact us by clicking here or by calling (800) 598-5017.