Whether the loss of a loved one is sudden or expected, no one is ever really prepared to say goodbye. It may also be difficult to accept that life goes on while you grieve. Bills continue to arrive, and creditors want their money.
You were probably grateful to your spouse for taking out the life insurance policy meant to provide for you during this time of sorrow. When the life insurance company notified you that your spouse had died within the contestability period, you may have been stunned and perhaps confused.
What is a contestability period?
If your spouse died within two years of taking out a life insurance policy, the policy was still in its contestability period. This means that the insurance company can legally delay your payout while it investigates your situation. Essentially, the company is looking for evidence that the person who took out the policy materially misrepresented the facts.
One example of a material misrepresentation might be omitting the fact that doctors are treating you for heart disease. This becomes relevant if you die of a heart attack within the contestability period.
What happens if the insurance company contests my claim?
Even if your loved one dies within the contestability period, an insurance company may choose not to contest your claim. However, if they do, an agent will examine the policy for inconsistencies. These may be intentional misrepresentations or honest oversights. An agent will also review your loved one's medical records to see if anything relevant was omitted from the policy application. After the investigation is complete, the agent will take one of the following actions:
- Determine there are no material misrepresentations and pay your claim in full
- Determine there are material misrepresentations and adjust your payout by deducting the difference in premiums your spouse should have paid
- Determine there are significant misrepresentations and deny the claim, refunding to you the premiums
The life insurance industry maintains that it disputes less than 1 percent of claims each year. Nevertheless, if your claim falls into that 1 percent, you may find yourself in a difficult financial situation.
How do I find help if my claim is denied?
If you were counting on a life insurance payout to cover the medical or funeral expenses of your loved one, or if you simply need to pay the bills now that your loved one's income is no longer available, notification that the insurance company is contesting or denying your claim may be frustrating. With all the anxiety and emotion you have been through, you wonder how you are going to manage dealing with this new grief.
Fortunately, you have recourse to experienced and compassionate help. Insurance attorneys understand how the claims process works, and they will negotiate and advocate for your cause. The world of insurance is complex and confusing, and your lawyer knows what is at stake for you. Having an attorney on your side means you have someone who will fight for a positive resolution.