Life insurance not paying out? Here are the three most common reasons and what to do when your life insurance claim is denied.
If there is any evidence to suggest the insured committed suicide, the life insurance company will deny your claim for death benefits.
When an insured commits suicide during the first two years of the policy, called the “contestability period,” that is grounds for claim denial even if the policy does not expressly exclude death by suicide from coverage. There is a public policy reason for this – to discourage those intending to commit suicide from taking out a life insurance policy to provide a windfall for their loved ones.
The death certificate may or may not list suicide as the cause of death. Even if it does, there are many causes of death that look like suicide but are not, such as autoerotic asphyxiation or accidental discharge of a firearm. In these cases, an experienced life insurance beneficiary attorney can help you fight the denial of your claim.
Death due to drug or alcohol overdose is commonly excluded from life insurance coverage. If an insured had drugs or alcohol in their system at the time of death, the life insurance company will likely deny a claim for death benefits even if the cause of death had nothing to do with drugs or alcohol.
Why? Because life insurance companies only make money for their shareholders when they don’t pay claims. This inherent conflict of interest means that many legitimate life insurance claims are unfairly denied. Be sure to consult with an experienced life insurance attorney if your claim was denied for this reason.
Life insurance coverage lapses and terminates if the insured fails to pay premiums. If the policy lapsed and the insured dies, the life insurance company will deny a claim for death benefits.
However, there are many instances when policy lapse is not the fault of the insured and a claim denial can be overturned, such as:
Never take no for an answer. If your life insurance claim was denied for one of these reasons or any other reason, be sure to consult with a life insurance attorney to determine whether you have grounds to fight the claim denial.
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