When Life Insurance Benefits are Wrongfully Denied
When someone purchases a life insurance policy, they fully expect that when the time comes, the insurance carrier will pay the claim according to the terms of the policy. While it may be unusual for an insurance company to deny a claim, it is not impossible. There are various reasons why an insurance carrier may deny a life insurance death benefit claim. Some of the claim denial reasons are legitimate, but others are signs of bad faith insurance practices.
Valid Reasons for Claim Denials
If a life insurance claim is denied, you can expect to receive some sort of written communication from the insurance carrier. This will typically be a denial letter explaining their reasoning in detail. Some of the most common scenarios upon which a life insurance claim may be reasonably denied include the following:
- The policy lapsed due to a lack of payment
- The policyholder was not truthful on their application
If a life insurance policy is denied because of these reasons, it will likely be difficult to appeal. Life insurance policies typically include language that avoids coverage for non-payment or if the policyholder was untruthful during the application process. For example, if a person falsely stated that they did not have a history of smoking but died due to a tobacco-related illness, the insurance company is unlikely to pay out a settlement.
Additionally, most insurance policies include a suicide clause under which they will deny death benefits if a person dies due to a self-inflicted wound. Sometimes, a suicide clause is limited to only the first two or three years of buying the policy, though the exact timeframe ranges depending on the insurance company and the language of the policy.
If a person dies for any reason within the first two years of obtaining their life insurance policy, this will generally fall into the contestability period of the policy. During this time, the insurance carrier may perform a complete review of the death benefit claim to ascertain whether or not there was any fraud or misrepresentation on the application.
Signs of Insurance Bad Faith
There are times when insurance carriers deny claims without any legal basis. This will be considered bad faith insurance practices. Some of the signs of bad faith practices concerning life insurance include the following:
- Denying a claim for no reason
- Failing to affirm or deny claim coverage in a reasonable amount of time
- Requesting burdensome documentation not required by the terms of the policy
- Using harassing or intrusive investigative techniques to victimize the claimant
- Intentionally withholding or rest representing claim information
- Harassing, pressuring, or otherwise encouraging a claimant not to pursue the claim
- Encouraging a claimant not to hire an attorney
What Are Your Legal Options?
When a life insurance claim has been denied, the claimant may have a few options. First, they could contest the decision on their own if the insurance carrier has an appeals process. The claimant will have to present the evidence they have gathered, but this process can become complex.
A claimant may very well have to file a lawsuit against a life insurance carrier if they believe that bad faith insurance practices played a role in the claim denial. These cases can become incredibly complicated, but many claimants are left with no choice in these situations.
Get Help from an Elder Abuse Attorney
A qualified elder abuse attorney can help you through the process of understanding life insurance policies and the possible reason for a denial. Elder abuse attorney Joel Bryant has extensive experience with all sorts of elder abuse cases, including life insurance fraud and scams. Attorney Bryant has the resources necessary to conduct a complete investigation into these cases, fully analyze the insurance documents, and help families obtain the compensation they are entitled to.