Life insurance is intended to provide benefits in the event the insured person passes away. The insured person agrees to pay a defined amount for the duration of the insurance policy, called a premium, and the insurance company agrees to pays a sum of money to the beneficiaries of the policy.
It is often purchased by people who financially support their family, especially parents with young children or older couples who want to provide for their surviving spouse.
In addition to replacing the provider’s income and paying for final expenses, it can also help pay financial obligations like a mortgage or other debts for the family members left behind.
Types of life insurance
There are three general types of life insurance.
Term life insurance pays a specific lump sum to a designated beneficiary when the insured person dies. Whole life insurance provides a death benefit and a cash value. Universal life insurance pays a death benefit and provides flexibility by allowing the policy owner to change the amount of the benefit and change the premiums.
The insurance carrier may deny benefits if the policy lapsed prior to the policyholder’s death, if there is no named beneficiary or when a previous spouse is still listed as the beneficiary on the policy after the policyholder’s remarriage, among other reasons.
They may also be denied because the insurance company believes the policyholder misrepresented information on the application or they may state that the circumstances of death fell outside of the coverage limits.
The reasons for denial can be complex, but an experienced attorney can review the denial and provide representation to the beneficiaries. It’s important that the beneficiaries receive the financial support they are entitled to.