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ERISA • Employment Law

Possible Reasons for Life Insurance Claim Denials

14 Apr 2020

You might assume that if a loved one had life insurance coverage; the company should pay benefits to the proper beneficiaries following their death. Unfortunately, life insurance providers will not automatically approve claims, and they can – and do – deny claims for various reasons. If you received a denial, it is important to determine the exact reason why, and you should speak with an experienced Philadelphia life insurance appeals attorney. The following are only some reasons why a life insurance claim might be denied.  

Cause of Death

Life insurance adjusters will look into the cause of death of the policyholder, as policies have exclusions for certain causes of death. Generally, you can learn about such exclusions in the policy, though policy language can be confusing, and it is not always black or white whether a death should be covered. For example, some life insurance policies do not cover death by suicide, so a claim will be denied if the company determines the policyholder committed suicide, if such an exclusion applies.  

Omissions or Misrepresentations

People are expected to be honest and forthcoming on life insurance applications. If the policyholder omitted pertinent information or provided inaccurate information on their application, the claim can be denied, even if they paid their premiums and the policy was active. Examples might be lying about alcohol abuse and then dying of liver failure or concealing a diagnosis of a life-threatening medical condition. Life insurance companies will most regularly investigate the information provided if the policyholder died within two years after obtaining the coverage, which is often referred to as the contestability period.  

The Policy Lapsed

The life insurance company only agrees to pay death benefits in exchange for agreed-upon premiums from the policyholder. If the policyholder did not maintain payments as agreed, the policy can lapse, and the insurer will likely cancel the policy and refuse to pay out to beneficiaries. 

There was a Wrong Beneficiary or No Specified Beneficiary

Part of obtaining life insurance coverage is naming a beneficiary who will file the claim and receive the death benefits. If you file a claim yet are not the named beneficiary, your claim will be denied. If there is no beneficiary designated at all, the death benefits should go to the estate instead of an individual. This would mean the funds would be tied up until the estate goes through probate, which can take time. 

After a life insurance claim denial, you should have an attorney review the decision and determine the reasoning behind the denial and whether you can appeal. Insurers make mistakes and wrongful decisions, and it is often possible for the right legal professional to fight for the death benefits you deserve. 

Discuss Your Denial with a Philadelphia Life Insurance Attorney Today

The Garner Firm assists clients with life insurance denials and appeals, and we can evaluate your options if your claim was denied. Contact us to discuss the next steps in obtaining the death benefits you need and deserve.

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Mr. Garner is an ERISA employee benefits and employment attorney with over a decade of experience. The laws governing employee benefits, the employment relationship, and the workplace are complex.

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