Introduction
Having life insurance is smart for those who want to give their family members a cushion in the event of their unexpected passing. The money could be used to settle outstanding bills (such as a mortgage or school loans), cover final expenses, or be set aside as an inheritance.
Assuring somebody’s family members with a life insurance policy can help them rest easy. Still, you might be curious about the percentage of claim denials that result in nothing for the beneficiaries. The possibility is terrifying, but you shouldn’t stress too much. That’s because disapproval of a claim is extraordinarily rare in the life insurance industry.
Although the likelihood of having a life insurance payout denied is extraordinarily low, you should nevertheless be aware of the factors that can put a claim in question. On that note, let’s take a look at some reasons why life insurance agencies could deny life insurance claims.
Reasons Why Life Insurance Claims Can Be Denied
1. Failure To Disclose Relevant Information
Life insurance applications require applicants to be completely honest about their health and other relevant risk elements, such as participation in high-risk activities (like skydiving). A life insurance payout could be rejected if false information was provided during the application procedure. To put it simply, your underwriting category for life insurance is based on your expected lifespan.
That’s why it’s crucial to consider a patient’s medical history when setting premiums. To “materially misrepresent” oneself on a life insurance application means to omit essential information that might affect the cost or suitability of the policy.
An example of this would be making an untrue or inaccurate statement or failing to disclose relevant information. If there has been a major misrepresentation, the company will be unable to issue fair premiums. An application that would’ve been rejected might be accepted because of a false statement.
If your life insurance agency discovers any form of significant deception, they have the right to cancel your coverage, and your beneficiary will get no payout.
2. Didn’t Pay Premiums On Time
Based on how much under you are, you might be able to catch up on any life insurance premiums that have fallen due. The typical grace period for life insurance premium payments is 30 to 31 days. There will be no interest imposed if you pay late. The death benefit will be paid to your beneficiary if you die away during the grace period, but the amount of the unpaid premium will reduce it.
If your life insurance coverage has lapsed because you failed to pay the premiums when due, you can sometimes renew it by settling the arrears, plus interest. Different companies and jurisdictions have different regulations regarding policy reinstatement.
In Texas, for instance, most life insurance agencies will let you reactivate your policy within five years. Still, you’ll have to address additional health questions or undergo another life insurance physical check.
3. Death Due To Suicide
If a suicide occurs within the 2-year contestability period, the life insurance agency may dispute and reject the claim. The intent of the suicide condition in a policy is to deter people from buying life insurance while actively thinking about taking their own lives. Suicide does not automatically void a life insurance policy. Thus, payments paid could be returned to beneficiaries.
Generally speaking, the death benefit might not be given out if the policyholder departed during the contestability timeframe. Most people are unaware that they can challenge a death certificate rejection by providing a copy of a police document outlining the circumstances surrounding the death. Additionally, most insurance companies no longer classify physician-assisted euthanasia as “suicide.”
Get In Touch With Franklin Life & Annuity
Even though getting your life insurance claim denied is extremely heartbreaking, it is ultimately the policyholder’s fault for not understanding the terms and conditions laid out by their insurance companies. That’s why it’s recommended to work with transparent life insurance agencies that help you from the get-go, such as Franklin Life & Annuity.
We are among the leading providers of life insurance in Houston, Texas. We have been helping people get the coverage they require since 2002 and have helped thousands of people get adequate life insurance coverage. Whether anyone requires family life insurance in Houston, Texas, or final expense insurance for seniors in Houston, we offer it all. Contact us today to learn all about us.