You feel like you have secured your life with a life insurance policy, but that’s far from the truth. There are many reasons why life insurance claims are delayed or denied. For example, if you fail to disclose material information about your health or lifestyle, the insurance company may refuse to pay out on your policy. While this is one of the main reasons for the claim denial or delay, here are ten other reasons you need to know.
You Lied on Your Application
When applying for life insurance, you must take a medical exam. The insurance company will use the results and the information provided on your application to determine your risk factors and, ultimately, how much to charge you for coverage.
Chris Stocker of Diabetes 365 notes, “If an insurance company finds out you made a material misrepresentation on the application, they may rescind the policy and coverage. Life insurance providers have many ways to investigate you, such as background reviews and even by using social media platforms. If you’re applying for life insurance for gestational diabetes, you’d need to answer the questions honestly and accurately.
If you lie on your application and the insurance company finds out, they can (and will) deny your claim. They may also refuse to pay out on your policy if it’s later determined that the information you provided was material to the risk assessment and premiums charged.
Life Insurance Attorney, J. Price McNamara recommends filling the application form correctly to avoid such delays and denials.
You Forgot to Pay Your Premiums
Your life insurance policy is only as good as your last premium payment. If you let your policy lapse by forgetting to pay premiums or cancel it outright, the insurance company has no obligation to pay out on a claim.
Almost all life insurance plans have a suicide clause that voids the plan if the insurance buyer passes by suicide within a certain period, typically two years from the plan date activation. So, if you commit suicide within that period, your beneficiaries may not receive anything.
Misstatement of Age
When applying for life insurance, you must provide your correct age. Your premium is based partly on your age, so if you misstate it on your application, the insurance company can deny your claim.
Drug or Alcohol Use
The insurance company can deny your claim if you use drugs or alcohol excessively and don’t disclose it on your life insurance application. They may also refuse to pay if it’s later determined that your drug or alcohol use contributed to your death.
If you participate in dangerous hobbies, such as skydiving or rock climbing, and don’t disclose it on your life insurance application, the insurance company can deny your claim. They may also refuse to pay out if it’s later determined that your participation in these activities contributed to your death.
Not Following Medical Advice
The insurance company can deny your claim if you’re diagnosed with a medical condition and fail to follow the recommended treatment plan. For example, suppose you’re diagnosed with cancer and refuse to undergo chemotherapy. In that case, the insurance company may argue that you contributed to your own death.
Death Occurs Outside the Policy Period
Most life insurance policies have a specified period, usually one or two years. If you die outside of this period, the insurance company is not obligated to pay out on your policy.
Death Is Excluded from Coverage
When you purchase a life insurance policy, you’re typically required to select a benefit amount and list the beneficiaries who will receive those proceeds upon your death. However, some policies exclude certain types of death from coverage. For example, most life insurance policies don’t cover deaths caused by war or acts of terrorism.
The Death Certificate is Incomplete
The death certificate is an important document that the insurance company will use to process your claim. If the death certificate is incomplete, it may delay the claims process. To make sure the death certificate of your loved one is filled out correctly, you should contact the funeral home or mortuary where the death occurred.
If your life insurance claim is denied or delayed, it’s important to review your policy documents and contact the insurance company to find out why. We hope the above-mentioned tips will help.
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