What Are the Reasons a Life Insurance Claim Is Denied?

If your life insurance claim has been denied, there are a number of reasons an insurance company may deny a claim, among them:

• The type of death not being covered by the policy (most often because the death was self-inflicted)
• Exclusions in the policy apply to exclude coverage
• Relevant information was not given at the beginning of the insurance process and the policy is rescinded
• The policy premiums had not been timely paid

What Are a Life Insurance Company’s Responsibilities?

It is important to know what duties life insurance companies owe you, the insurance customer, so that you can properly assess whether your insurer has properly lapsed your policy. A list of common responsibilities are:

• If your policy is due to lapse soon, the insurance company is obligated to send you several notices warning of the possibility your policy will lapse.
• Insurance companies must send clear and obvious pending lapse notices to your correct address. 
• Insurance companies must follow all state laws that pertain to grace periods or notification specifications. 
• In some circumstances, customers who are 65 or older are owed special notification if their policy is in danger of lapsing. 
• Insurance companies must properly allocate the premiums paid to them.
• Insurance companies must notify of your right to designate a third-party to receive insurance notices.

Depending on the circumstances of a particular case, an insurance company’s failure to follow one or more of the above obligations may preclude them from lapsing your life insurance policy and denying your claim. 

What Steps Should You Take to Respond to a Life Insurance Denial Involving a Policy Lapse?

If your life insurance claim has been denied because your life policy has lapsed, there are steps you should take to respond to the denial. These steps are:

1. Carefully review the insurer’s denial letter.  Typically, life insurance claim denials must be in writing and explain the policy terms the insurer is relying on to deny the claim and the reasons for the denial.  Therefore, it is critical to carefully review the life insurance claim denial letter.  You may be able to correct mistakes that may exist in the letter by providing new information to the insurer that can result in a reversal of the denial decision.  
2. Contact your insurance company. By doing this, you can learn why you were denied and clear up any mistakes on either your or the company’s part. You also may be able to discuss what information the insurer needs to properly pay the claim. This is also your opportunity to find out what kind of documentation (such as a death certificate or proof of premiums being paid) you should have available as evidence for an appeal.
3. Contact a life insurance claims lawyer. You should strongly consider hiring an experienced life insurance claims attorney to assist you to give yourself the best chance at success.  If the reason for the claim denial is that your policy was lapsed, you will need to know why it was lapsed and why the insurer may have improperly lapsed your policy.  Laws and regulations are very complex when it comes to life insurance, and especially life insurance lapses, and an experienced life insurance claim lawyer can help you successfully navigate your rights and can adequately respond to the insurer.. Your lawyer should help you identify and organize the evidence you need and act as a go-between with the insurance company and yourself.   
4. Gather all relevant documentation/evidence. By this point, you should know exactly why the initial claim was denied and so should have a sense of what evidence you may need. For example, evidence of payments made, premium and lapse notices, grace period notices, and other relevant letters between you and your insurer. Your lawyer will help determine what you should look for on this step.
5. Decide if you want to or are required to appeal the decision. Once all your evidence and argumentation is in place, you will need to submit your official appeal. This step can be done on your behalf by your lawyer as well. 
6. Keep in communication. Once your appeal has been submitted, you or your lawyer should keep checking in with the insurance company and getting updates on the status of your case. 
7. If your appeal is denied, consider whether you should file litigation against your insurer. 

If you have any questions about life insurance, do not hesitate to schedule your free consultation with McKennon Law Group PC to determine your rights.