No one wants to think about the possibility of a life insurance claim being denied. After all, the whole point of having life insurance is to ensure your loved ones are financially secure when you’re no longer around. But the reality is that sometimes claims are denied. Here are ten reasons why that might happen and what you can do to prevent it.
- Non-disclosure: If you haven’t been entirely truthful or have omitted crucial information during the application process, your claim could be denied. Always be upfront and honest when applying for life insurance.
- Policy Exclusions: Life insurance policies often have specific exclusions. For example, some may not cover deaths resulting from risky activities like skydiving or car racing. Be sure you understand your policy’s exclusions.
- Lapsed Policy: If you fail to pay your premiums on time, your policy could lapse, leading to a denied claim. Setting up automatic payments can help ensure you never miss a due date.
- Death During Contestability Period: If the policyholder dies within the first two years of the policy (the contestability period), the insurance company can investigate the claim thoroughly, which could result in denial. Avoid this by being truthful on your application.
- Misrepresentation: Similar to non-disclosure, if you misrepresent any information—like age, income, or health conditions—the claim can be denied. Honesty is paramount.
- Suicide or Self-inflicted Injuries: Most life insurance policies have a clause excluding suicide within the first two years of the policy. Ensure you fully understand your policy’s terms.
- Illegal Activities: If the policyholder dies while committing illegal activities, the insurance company could deny the claim. Obeying the law is not just good practice—it could also impact your life insurance claim.
- Death in a Specific Location: Some policies have geographical restrictions, meaning if the policyholder dies in a certain country or location, the claim could be denied. Be aware of these restrictions, especially if you travel frequently.
- Policy Type: Certain types of life insurance, like term life insurance, only cover you for a specific period. If the policyholder dies after the term has expired, the claim will be denied. Make sure you understand the type and term of your life insurance policy.
- Fraud: If the insurance company detects any fraudulent activities related to the policy or claim, it will be denied. Always conduct affairs related to your life insurance policy with utmost integrity.
Knowing these common pitfalls can help you avoid a denied claim. Remember, the professionals at Vandergrift Insurance Group are always here to help guide you through the process of selecting the right life insurance policy and understanding all the ins and outs. And the best part? Our services are always completely free.
