Common Denial or Delay Tactics Used By Life Insurance Companies
Life insurance is generally purchased to protect the beneficiary or beneficiaries financially. Due to this, it is essential that insurance companies pay life insurance benefits timely. The last thing a life insurance beneficiary has to deal with is unreasonable denial or delay of benefits by an insurance company. You should look for companies that offer disability insurance that covers mostly all types of diseases.
Common denial or delay tactics used by life insurance companies
When companies deny claims, they often cite policy exclusions and provisions that are complicated or difficult to understand because they contain legal terms and ambiguous language. Sometimes it is performed to convince the beneficiary that they do not have the right to benefits when they do.
Once a claim is denied or delayed, it is essential to seek legal advice because insurance companies often misinterpret the law and policy language. Mentioned below are some of the common denial or delay tactics used by insurance companies:
Alleged misstatements in the coverage application
Most policies have a contestability period. If the insured dies within this period, the company will contest the policy issuance if there are material information misstatements in the coverage application. Some policies and state laws allow the insurance company to abolish the policy after the contestability duration if the person intentionally provided fraudulent information in the application.
The reason for death allegedly does not come under the policy.
Many policies exclude death resulting from specific reasons like:
- Dangerous hobbies or activities
- Illegal activities
- Drugs or alcohol use
- Acts or riots or war
Many excluded provisions are unclear, and often, when read together, such exclusions cancel each other out. Other than that, life insurance companies cite these exclusions to deny claims wrongfully.
Premiums were not paid.
A common way to deny a claim by insurance companies is by mentioning that the policy has lapsed before the insured person’s death due to not paying the premiums.
Beneficiaries have the right to know whether the insurance company sent the premium notices to the insured individual at the correct address and whether the notice had explained clearly to the insured individual that the policy would expire if the premiums were not paid on time.
The insured individual failed to submit the waiver of premium or coverage application.
Group life insurance obtained from employment is common. Generally, the insured individual is responsible for explaining the advantages to its covered individuals and submitting the required information to the insurance company. Give appropriate documents to the insured individual, and collect and pay premiums.