What to Do When a Life Insurance Claim Is Denied

Facing the denial of a life insurance claim can be a distressing experience, casting uncertainty over financial security during already challenging times. In this blog post, we explore common reasons for denials and provide actionable steps for policyholders and beneficiaries to navigate this situation. 

Understanding the process and available recourse can offer invaluable peace of mind and help ensure that rightful benefits are ultimately received.

Top 7 Reasons Your Life Insurance Claim Was Denied

It's important for beneficiaries to thoroughly understand the terms of their life insurance policy and to provide accurate information to the life insurance companies to avoid potential claim denials. Here are some reasons why life insurance claims can be denied.

1. Material Misrepresentation

Failure to disclose pre-existing medical conditions or lifestyle habits can invalidate the life insurance policy. Insurance companies meticulously review applications, and any discrepancies can lead to claim rejection. Transparency and honesty are paramount to ensure policy validity and secure benefits for beneficiaries.

2. Policy Lapses

If a policyholder fails to pay premiums on time and the policy lapses, coverage may be terminated, leading to a denial of any subsequent claims. It's crucial to stay up-to-date with premium payments to keep coverage active.

3. Policy Exclusions

Certain events or circumstances may be explicitly excluded from coverage, such as death resulting from specific activities like hazardous sports or illegal activities. If the cause of death falls within these exclusions, a life insurance company may deny the claim.

4. Investigation and Fraud Concerns

Insurance companies thoroughly scrutinize claims to detect any signs of fraudulent activity. If there are discrepancies or irregularities in the claim, the insurer may initiate an investigation, delaying the processing or potentially denying the claim altogether. 

5. Policy Terms and Conditions

Life insurance claims can be denied if they do not adhere to the policy's terms and conditions. It's crucial to understand the specific requirements outlined in the policy regarding coverage limits, exclusions, and claim procedures. Failing to meet these requirements, such as by submitting a claim beyond the policy's expiration date or exceeding coverage limits, can result in denial.

6. Bad Faith Tactics

Unjustified delays, inadequate investigations, or wrongful interpretation of policy terms refer to bad faith tactics. When insurers act in these ways, they fail to fulfill their contractual obligations to policyholders and beneficiaries. Recognizing signs of bad faith and seeking legal assistance can help challenge wrongful denials.

7. Other Contestable Circumstances

Typically, denial of life insurance claims under contestable circumstances occurs within the policy's contestability period, which is usually during the first two years following the death. 

During this time, insurers may investigate claims thoroughly, scrutinizing medical records and application details for discrepancies. If material misrepresentations or undisclosed information are discovered, the claim may be denied. Policyholders should ensure full disclosure during the application process to avoid complications during the contestability period.

How Long Do I Have to Appeal a Life Insurance Claim Denial in Texas?

In Texas, life insurance companies are required to furnish policyholders with a written explanation for any denied insurance claim, along with a designated timeframe for filing an appeal. 

Typically, policyholders have 60 days from the date of the denial to initiate the appeals process with the insurer. If the appeal is unsuccessful, policyholders may opt to lodge a complaint with the Texas Department of Insurance or get a consultation from life insurance lawyers.

What Steps Should You Take If Your Life Insurance Claim Was Denied?

Having your life insurance claim denied can be a distressing situation. By taking the following steps and remaining proactive, you can work toward resolving the denial of life insurance claims and securing the financial support to which you're entitled.

Review the Denial Letter

Carefully review the denial letter provided by the life insurance company. It should outline the reasons for the denial and any specific policy provisions or evidence cited to support the decision.

Understand the Reasons for Denial

Make sure you understand why your claim was denied. Understanding the specific grounds for denial will help you determine your next steps.

Gather Documentation

Collect all relevant documentation related to the claim, including the life insurance policy, application, medical records, and any correspondence with the life insurance company. Having thorough documentation will be essential if you decide to appeal the denial.

Consult with an Attorney

Consider seeking advice from a qualified attorney who works in insurance law. They can review your case, guide your options, and represent your interests if you decide to pursue further action, such as filing an appeal or initiating legal proceedings.

File an Appeal

If you believe the denial was made in error or if you have additional evidence to support your claim, you can file an appeal with the insurance company. Follow the instructions outlined in the denial letter for filing an appeal, and submit any additional documentation or information that may support your case.

How Do You Avoid a Life Insurance Claim Denial?

If you have purchased a life insurance policy, there are a few things you can do to prevent claim denials and safeguard your loved ones' financial security:

• Provide Accurate Information: Ensure all details provided to the insurer are truthful and complete.
• Understand Policy Terms: Familiarize yourself with the terms, coverage limits, and exclusions of your policy.
• Pay Premiums Promptly: Avoid policy lapses by paying premiums on time according to the agreed schedule.
• Update Policy as Needed: Review and update your policy to reflect any changes in circumstances or beneficiaries.
• Disclose Changes in Health: Inform your insurer about any changes in health conditions or medical treatments.
• Avoid Risky Behaviors: Minimize engaging in activities that could void coverage, such as extreme sports or illegal actions.
• Keep Beneficiaries Informed: Make sure beneficiaries are aware of the policy and how to file a claim.
• Maintain Detailed Records: Keep thorough documentation of policy information, payments, and communications with the insurer.

Unfortunately, simply purchasing a life insurance policy is not enough to make sure your beneficiaries receive payment in the event of your death. Take steps to make benefits accessible and less likely to be withheld by the insurance company.

How Can Our Texas Life Insurance Lawyer Help You?

Our Texas life insurance lawyer can provide guidance and advocacy to navigate claim denials effectively and secure rightful life insurance benefits for policyholders and beneficiaries.

We can help you by offering:

• Claim Review: Have your denied claim thoroughly reviewed to identify potential grounds for appeal or legal action.
• Negotiation Skills: Use the lawyer's negotiation skills to advocate for fair settlements with insurance companies.
• Compliance Assurance: Ensure compliance with Texas insurance laws and regulations throughout the claims process.
• Representation: Receive dedicated representation in legal proceedings or dispute resolution, safeguarding your rights and interests effectively.

At Omar Ochoa Law Firm, our team is dedicated to providing personalized service to every one of our clients. We see you as the individuals you are — not case numbers.

Pursue a Positive Resolution to Your Life Insurance Claim

Facing a denied life insurance claim can be distressing. By understanding common denial reasons and taking proactive steps, beneficiaries can secure rightful payments and peace of mind.

With Omar Ochoa Law Firm, you're not alone. Our experienced team is here to guide you through the appeals process. Contact us today for a consultation and take the first step toward resolution.