Why Life Insurance Claims Are Denied
We have found that life insurance companies often look for excuses not to pay benefits for which the insured has paid premiums for years, often decades. These excuses usually fall into one of two categories.
Excuse #1: Health History Misrepresented in Original Application
Life insurance applications ask many questions about the insured person’s health history. The insurer typically requires the insured to have a physical examination before the policy is issued. If the insured dies within the next two years, the insurer will look very closely at the application, obtain the insured’s medical records, and decide whether the insured made any errors in the application about his or her health history. If so, the insurer will probably deny the claim.
Our firm has helped many clients who were wrongfully denied life insurance benefits owed upon the death of their family member or business partner. We often find either that the insured person (now deceased) was not aware of the health condition that was misstated or not disclosed, or that the insured person forgot about the condition because it had been diagnosed long ago and/or there was no medical treatment of it. In some cases, the insurance company was not misled by the misstatement or omission, because its own physical exam revealed the health condition. In yet other cases, the misrepresentation had no relationship to the cause of death. In all of these circumstances, we have been successful in eventually obtaining payment of the life insurance claim either through settlement negotiations, an administrative appeal, or a court case.
Excuse #2: Death was not “Accidental,”
Many life insurance policies pay benefits only if the insured died as the result of an accident, or pay additional benefits for death caused by accident rather than illness. Insurers often deny accidental death claims with the excuse that the death was not really “accidental.” The insurance company often claims that a death was not accidental because the decendent’s actions were so reckless that death was a foreseeable risk and thus not accidental. This excuse is used repeatedly by insurers in denying claims that involve drinking and driving.
Often, these denials are wrongful and the excuses are not legitimate. We have successfully handled cases where the insurance company improperly defined “accidental,” or was unfairly selective about the law and evidence it considered in deciding whether the death was “accidental.”
It is important for any person who makes a life insurance claim to know that they are not automatically “stuck” with an unfair claim denial, no matter what the insurance company or the policy itself says.
Excuse #3: Death Not Covered Because of Exclusion in Policy
Life Insurance policies and Accidental Death policies often contain exclusions that preclude coverage under certain conditions. Typical exclusions include death caused by suicide, commision of a felony, intoxication, or in the case of an accidental death policy, exclusion for a death caused by illness or treatment thereof.
The exclusions in the policy are often misapplied by the insurance company to deny coverage. There are numerous issues that may be raised to defeat these exclusions including statutory limitations; causation requirements; and the fact that there is often more than one cause of death and determining whether the excluded cause is the predominant cause or just a contributing cause of the loss.