When a life insurance claim has been denied it can be serious for surviving family members or beneficiaries who may be struggling financially and suffering the unexpected loss of a loved one. For that reason, families and intended beneficiaries should be familiar with how they can dispute a denied death benefit claim.
Reasons life insurance claims are denied
A life insurance claim may be rejected if the life insurance policy lapsed, if the policyholder lied on their application for life insurance, if the death is by suicide in the first few years of the policy or if the policyholder was murdered by the beneficiary. Misinformation provided on an application for life insurance coverage or on the claim for a death benefit can potentially be causes for a denial. The life insurance claim could also be denied if the life insurance policy lapsed due to nonpayment.
Ways to dispute a life insurance claim denial
Beneficiaries can contest the denial of a life insurance claim. The insurance company should provide a clear explanation as to why the life insurance claim was denied. They should receive a written denial letter. A denial of a death benefit based on error may be possible to have reversed. Insurers may also deny a death benefit claim for bad faith reasons or may underpay the claim or delay paying the claim. All of these reasons for a denial can be problematic.
When a life insurance claim has been denied based on bad faith on the part of insurer, it is essential for family members and beneficiaries impacted to be familiar with how they can challenge an insurance claim denial.