When you’ve spent years paying into a life insurance policy, you expect that your family will be protected against financial hardship should something happen to you. Indeed, many of us never think that a claim on our policy will ever be denied especially when you are dealing with so much such as planning a funeral. But it can and does happen. While there is nothing you can do about your life insurance policy after you’ve gone, there are certainly steps you can take now to prevent the possibility of a family member’s claim being denied at some future date.
The first thing to realize is that no claim will go without careful examination by the insurance company. Careful examination must occur in order to catch any discrepancies in information that may prevent the payout of a claim. And there are several potential ways for discrepancies to occur.
The bulk of denied life insurance claims are due to something called ‘material misrepresentation’. This occurs when the owner of a life insurance policy did not state important facts or omitted them when applying for coverage. There are many scenarios which can be construed as material misrepresentation.
If you told the life insurance company that you were a non-smoker when you did smoke, this could be enough to cause a denial on a claim your loved one makes. This can happen even if the cause of your death was completely unrelated to smoking.
The same is true when you don’t tell all regarding your income and employment. Any mistruths or omissions regarding these two items can result in material misrepresentation being the reason for a denied life insurance claim.
Not letting your insurance company know when you participated in any hobby or otherwise-classified sport that carries a high risk can also get a life insurance claim denied. Even if you passed away after having tried the risky venture for the first time, it is still material misrepresentation that can definitely cause a claim to be denied.
Next on the list of common reasons for the denial of a life insurance claim is having multiple claims. If a life insurance company has received a claim from more than one individual, such as from two former spouses of the deceased, they may take several possible stances. Find the appropriate flowers and greenery at an Orange County Plant Nursery
Life insurance claims denied due to multiple requests can happen when a single person changes their named beneficiary, but that change was not received by the insurance company, or didn’t contain the proper information. This possible outcome can be avoided by being as clear as possible in all marriage or divorce documents in addition to being honest on your life insurance application.
Many life insurance claims can be denied due to there being insufficient time between when the life insurance policy came into effect and the policy holder became deceased. There is usually a specific amount of time that must pass between policy issue and date of death before any claimant can obtain money.
Another scenario can be that your insurance company rejects a claim because, while they may not have indicated specific numbers of days, they didn’t feel there was adequate time between policy issue and when death occurred to warrant payout of the claim.
It is crucial, regardless of the insurance company or type of policy you have, that you maintain your policy payments. This is the most commonly-overlooked way to prevent a claim. By not making payments on your policy, you will cause the policy to lapse, which will put your insurance company to automatically deny any claims made on the policy.
Although there is a grace period given before an insurance company will end your policy due to non-payment of premiums, the insurance company can still deny benefits due to premiums not being paid on time.
It is crucial to make sure you have done your due diligence to ensure your loved ones can provide the proper burial and funeral for you.
Guest author Adam Foley writes on a variety of topics related to the insurance industry and Orange County Salsa Dance Lessons, including helping consumer compare life insurance companies in order to make the best decisions for their family.
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