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Top Reasons Life Insurance Claims are Denied

Life insurance is one of the great inventions of the modern world. If done correctly, it gives you peace of mind for your whole life. Your family is protected no matter what happens to you, and all you have to do is keep making those monthly payments.

And yet, there is still a risk that your life insurance won’t pay out if the proper protocol isn’t followed. This is a heartbreaking realization for people. Just the thought of all that money wasted that was meant to protect your loved ones is enough to bring tears to the eyes, but knowing the risks now make it easier to anticipate the problems and avoid them.

So, here is a list, thanks to Smith Kendall, PLLC, of the top reasons life insurance claims are rejected.

  1. Failure to make a claim in a timely fashion

Today, while everyone is healthy, this may seem ridiculous, that someone would fail to file a life insurance claim in a timely fashion, especially when most states give at least two years to file, and yet, life gets incredibly complicated after a death, especially a sudden and unexpected one. With so much to deal with, and if money isn’t immediately needed (thus reminding people to file), it’s easy to let paperwork get pushed aside indefinitely. Remind your loved ones now that this should be a priority, no matter when you pass.

  1. Disputes over the proper beneficiary

This is the first of several potential issues that can be most easily dealt with by being thorough when applying for life insurance. If there have been multiple beneficiaries to your will or life insurance, there may be disputes over who is the final, legal beneficiary. Keep these things simple and straightforward, and avoid making a lot of changes to make sure there is no confusion over this issue.

  1. Misrepresentation by the insured to the insurance company on the application

Insurance companies, as a rule, expect scrupulous, exact and precise details on applications and all communications. Go over the application multiple times to make sure absolutely nothing is missing. If something is wrong or missing, that can nullify the whole claim.

  1. Undisclosed medical conditions

This is perhaps the most common missing or misrepresented information. Do you have allergies? Did your doctor warn you that you had a minor medical condition that you thought wasn’t worth putting down? Well, put it down anyway. Be exhaustive about your health. If you aren’t, and especially if those issues somehow factor in your death, your entire policy may be nullified.

  1. Dispute over cause of death

There’s nothing you can do about this one, but it still comes up sometimes. There are the famous suicide clauses in life insurance policies, but those usually end after you’ve held the policy for two years.

As you can see, there’s a number of issues that can come up when a life insurance claim is made. It may be best to advise your family to consult a lawyer when filing a claim. While the hassle and expense of a lawyer may seem like a burden at that difficult time, getting everything right can make all the difference.

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