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Was there a valid reason why my life insurance claim was denied?

On Behalf of | Oct 1, 2021 | Denied Insurance Claims

People in Oklahoma City who hold life insurance policies do so with the intention that, when they die, their beneficiaries will receive what they are owed under the policy. Sadly, things do not always go according to plan and sometimes a life insurance claim is denied through an act of “insurance bad faith.” The following are some reasons why a claim under a life insurance policy may be denied.

Material misrepresentations

Life insurance companies have a bevy of reasons they claim should lead to a denial of benefits. For example, since a life insurance policy is based on the policyholder’s life expectancy, an insurer may claim the policyholder failed to disclose pertinent medical information when they applied for the life insurance policy. They will claim this amounts to “material misrepresentation.” Risky hobbies and behaviors and whether the policyholder worked in a dangerous occupation can also constitute material misrepresentation. Beneficiaries can counter such a denial by claiming the policyholder was honest when purchasing the policy.

Unpaid premiums

Another reason an insurer might cite in their denial a life insurance claim is that the policyholder did not pay their premiums before they died. While most policies have a month’s grace period to catch up on past due payments, if non-payments continue it could cause the policy to lapse. Beneficiaries may dispute this claim as well, especially if the deceased’s financial records show timely payments.

Living past policy terms

This only applies to those who have term life insurance. If you have term life insurance, there can be no benefits paid out to beneficiaries upon your death if you outlive the policy’s term. Beneficiaries can contest this by stting that the deceased renewed the policy at the end of the term or converted the policy to one without a term.

Remember you can contest a denied payout

If a payout to a beneficiary under a life insurance policy is denied, the beneficiary can first ask for a written account of the claim denial. Attempts can be made to privately resolve the dispute with the insurer. If this does not work, Oklahoma beneficiaries can contact Oklahoma Insurance Department for more information on their rights and what steps to take next.