Life Insurance Denial

People purchase life insurance to feel more secure. It gives them piece of mind that their family will have some comfort after their death. What many people don’t consider is the possibility that their insurer may try to deny a claim for the exact thing they are insuring against. While most life insurance companies follow through on their promises, thousands of legitimate claims are denied every year. Insurance companies are at their core a business, so they always have an interest in trying to hang on to their money.

Exclusion Clauses

Insurance companies may try to dupe you through an exclusion clause. These clauses outline what causes of death will not allow for recovery on the policy. It basically gives the insurance company an out. It is extremely important to read over the exclusion clauses in a policy to determine if it actually covers what you need it to cover. Companies may offer higher premiums if you want your insurance to cover what would otherwise be an exclusion. Common life insurance exclusions may include deaths that occur as a result of a dangerous activity, deaths that occur related to warfare, deaths resulting from alcohol or drug use, and suicide. Some companies have a habit of being vague in their exclusion clause language so they can later try to argue a death falls under one of the provisions. There are also practical matters that may prevent people from recovering. One example of this is if someone misstates their age or misrepresents something important about them in documents.

The Contestable Period

Insurance companies frequently use “the contestable period” to deny insurance claims. This is a certain period after a policy is issued, usually two years, in which insurance companies will try to debunk a claim. Insurance companies may try and claim that the information provided was deceptive, often nitpicking at otherwise valid documents to reject a claim. Companies may also try and claim that an accidental death was instead a suicide. Companies may even let errors in documents go unfixed, knowing they can use them as an excuse to reject the claim later on.

How Do Insurance Companies Deny Claims?

The most frequent reason given by insurance companies to deny a claim is omission. This is when a beneficiary omits information when applying for insurance to try and lower the perceived risk or issuing them a policy. In essence, it’s an effort to convince the insurance company that they are unlikely to die any time soon. Unfortunately, what is meant to be shield for insurance companies to be taken advantage of is often used as an offense with companies claiming there was an omission for a valid claim. Companies may claim you omitted something extremely important about your health to deny a claim for an event that had nothing to do with your health. For example, a company may argue that you omitted that you had asthma, when you died as a result of a car accident. Companies can claim omission within the contestable period.

Companies may also try and claim they you made a material representation when you applied for your policy. This is basically a claim that you lied about something important. This is not limited to the contestable period and can be argued at any time. A common example is when an applicant says they do not abuse alcohol or drugs and the company finds out that they do.

Large insurance companies have vast resources dedicated to making policies that purposefully favor them. They often find creative ways to word the policies and give them access to loopholes. Entire sections of these companies are dedicated to denying claims, in fact the entire insurance business mode thrives on this tye of behavior. You need a skilled life insurance attorney by your side.

If you or a loved one find yourself in a situation where your insurer is denying your claim, please do not hesitate to contact the attorneys at Altman & Altman, LLP to schedule your initial free-of-charge consultation. We are available to take your calls 24 hours a day, 7 days a week.