Life Insurance ClaimsLife insurance policies protect our dependents from financial difficulties when we pass, especially in an unexpected death. We pay premiums every month for years with the expectation that the insurance company will dispense the agreed-upon death benefit to our family.

Most of the time, life insurance companies hold up their end of the bargain. Unfortunately, in some cases, some companies refuse to pay the death benefit even when families make legitimate claims. In many instances, family members have to deal with a dispute on top of grieving their loved one.

Did your loved one’s life insurance company refuse to pay their insurance benefits without a valid reason? Did the company try lowballing the settlement amount? The personal injury attorneys at Rosenfeld Injury Lawyers, LLC, can help your family recover what you deserve.

Contact our wrongful death lawyers at (888) 424-5757 (toll-free phone number) for a free consultation to discuss your legal options.

Reasons Life Insurance Companies Use to Deny Claims

Life insurance companies help people secure their families’ futures after they die. However, these companies are businesses and will do their best to maintain their profitability. Sadly, some insurers use unfair tactics to avoid paying death benefits to clients that need them.

The following are common reasons why a life insurance company might deny a claim:

Material Misrepresentation

During life insurance policy application, you must disclose medical conditions and other possible risk factors, such as dangerous hobbies and lifestyle habits. Failing to disclose this information may be considered “material misrepresentation,” a reason an insurer could use to deny a claim.

The following is the information you must disclose during the insurance application process:

  • Medical conditions
  • Risky hobbies, e.g., skydiving
  • Risky behaviors, e.g., smoking
  • Dangerous jobs, e.g., construction workers

These factors help underwriters determine your life insurance underwriting class and may serve as a basis for denying or approving an application.

Material misrepresentation is the most common reason for denial in life insurance claims, implying that the policyholder lied or omitted information vital in assessing their risk. Insurers may use this reason to accuse the insured of fraud, even when no such thing occurred.

Denials based on misrepresentation are not allowed after the contestability period of the insurance policy.

Death Occurring Within the Contestability Period

Life insurance policies have a contestability period, usually two years from the date of policy issuance. If the insured dies during this period, the insurer may use any exclusions to justify denying the claim or reducing the life insurance benefits for the beneficiary.

Some insurers use the contestability period to take advantage of every possible flaw, error, or omission, often to the point of unfairness. For instance, if you fail to declare your heart disease during the application process and die in a car accident (an unrelated death), the insurer could make a bad faith denial if the death occurs within two years.

Death by Suicide

Most life insurance policies have a suicide exclusion clause, usually lasting up to two years after policyholders purchase life insurance. This clause would limit the payout for the beneficiary if the insured’s cause of death were ruled as suicide.

However, some insurers abuse this exclusion by taking advantage of vague terminology. For instance, a representative can make an “accidental death” seem like a suicide on paper.

Other Exclusions

Aside from suicide, many insurers deny claims for deaths caused by alcohol, drug use, criminal activity, and uncovered illnesses. These denials are not always fair, with representatives often looking for loopholes.

For instance, if the insured was mentally ill and died accidentally, the insurance company may argue that a self-inflicted injury caused the death.

You can pay higher premiums to remove specific exclusions from your life insurance policy. However, this does not guarantee that the insurer won’t deny your life insurance claim.

Accidental Death and Dismemberment Life Insurance Policies

Some people have accidental death and dismemberment policies (AD&D), which pay the full benefit to the beneficiary if the insured is killed in an accident. Some plans include a rider that pays twice the benefits if the policyholder dies in an accident instead of old age or natural causes.

However, many AD&D life insurance companies and riders pursue all loopholes to limit or avoid paying for legitimate claims.

Lapse of Coverage

A life insurance company could deny a claim if an insured person missed premiums before death. Non-payment of your life insurance could result in a lapse of coverage, meaning your policy will not be in effect. You could reinstate your coverage by paying your past-due premium with interest within a limited time.

Insurers may use missed payments as a reason to deny a claim. While it is only fair to forfeit a policy for non-payment, some companies abuse this rule to avoid paying life insurance benefits to beneficiaries. Claimants can also sue insurers for failure to accept premium payments during the grace period (the period wherein a policyholder can pay the balance and reinstate the policy)

Interpleader Lawsuits

An interpleader lawsuit usually arises when more than one beneficiary tries to claim the policy benefits. The insurer deposits money in the court’s registry and sues every possible beneficiary. Then, the beneficiaries have to litigate the suit to have the court determine who should receive the payment.

These lawsuits are often complex, especially when beneficiaries cannot reach an agreement among themselves. A competing beneficiary can be an ex-spouse, stepchild, friend, or newly added beneficiary. A life insurance lawyer is usually necessary in these cases.

How Long Does it Take to Receive a Life Insurance Payment?

An insurance company usually sends money to the beneficiary within 30 days of receiving the insured’s death certificate. If more than 30 days have passed, it likely means that the insurance company is investigating the claim further.

Consider contacting a life insurance attorney as soon as possible when this happens. An insurance company conducting further investigations could seek ways to deny your life insurance claim.

Appealing a Denied Life Insurance Claim

When an insurance company denies a claim, it must provide a reason in the denial letter. You would likely know if your claim was denied with a valid reason.

For instance, if your family member died from a covered medical condition but was denied coverage due to an “accidental death,” you have a reason to appeal. Appeal procedures vary by company, state, and who paid for the policy.

Employer-paid policies are governed by the federal Employee Retirement Insurance Security Act (ERISA). Beneficiaries under ERISA-governed policies do not have the right to a jury trial if a lawsuit is needed. If you win, you will receive the benefits but no additional damages.

A lawyer well-versed in the ERISA law plays a crucial role in appealing denied claims for employer-funded policies. Filing deadlines and evidentiary rules are strict, and you may be unable to recover money if you handle it without legal help.

Personal life insurance policies are governed by state law. You can sue for the benefits the life insurance company owes you in addition to damages caused by the insurer denying your claim in bad faith. Like ERISA policies, an attorney is crucial in appealing a denial.

What to Do When an Insurance Company is Acting in Bad Faith

An insurance company acts in bad faith when it refuses to meet its obligations to policyholders. Insurance companies act in bad faith when they:

  • Deny a life insurance claim without probable cause
  • Refuse to investigate a policyholder’s claim within a reasonable period
  • Offer a substantially low claim amount or pressure a beneficiary to accept a lowball offer
  • Fail to pay benefits within a fair amount of time
  • Fail to disclose policy exclusions and limitations before policyholders purchase insurance

You may have grounds to file a bad faith life insurance claim if you can prove that the insurer denied your claim in bad faith. Working with a life insurance attorney can help you recover what you deserve, plus punitive damages, if applicable.

Possible Damages in a Bad Faith Insurance Claim

In addition to the benefits in the insured’s life insurance policy, filing a life insurance case could help you recover financial compensation for:

  • Missed workdays
  • Emotional distress
  • Statutory penalties
  • Attorney fees
  • Punitive damages

Your life insurance lawyer can help you determine what damages you are entitled to during your initial consultation.

How a Life Insurance Lawyer Can Help

Dealing with a life insurance claim denial is an unnecessary hardship, especially while you’re grieving the loss of a loved one. Furthermore, a wrongfully denied claim can cause financial risks to your family, mainly if the deceased insured was the sole breadwinner.

An experienced life insurance lawyer can help if your loved one’s insurance company refused to pay death benefits. They will:

  • Investigate why the insurance company denied your claim
  • Determine if the denial was fair and justifiable
  • Identify the best ways to overturn the denial
  • Gather sufficient evidence to support your appeal
  • Determine additional damages caused by the denied death benefits claim
  • Represent you in court

Discuss Your Case With Our Experienced Life Insurance Attorneys

A life insurance policy is supposed to protect you from unnecessary financial hardship after a loved one passes. Unfortunately, some insurance companies fight tooth and nail to avoid paying for an insurance claim, despite collecting premiums for your loved one for years.

The life insurance attorneys at Rosenfeld Injury Lawyers can help your family appeal a denied life insurance claim and recover the benefits you deserve. We prioritize clients’ interests and leave no stone unturned when pursuing justice.

Contact our law firm at (888) 424-5757 or use the contact form for a free initial consultation. All confidential or sensitive information you share with our law firm will remain private under an attorney-client relationship.

Our experienced life insurance lawyers handle all accepted cases on a contingency fee basis. You don’t have to pay legal costs unless we win your case.


Client Reviews

Jonathan Rosenfeld was professionally objective, timely, and knowledgeable. Also, his advice was extremely effective regarding my case. In addition, Jonathan was understanding and patient pertaining to any of my questions or concerns. I was very happy with the end result and I highly recommend Jonathan Rosenfeld.

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Extremely impressed with this law firm. They took control of a bad motorcycle crash that left my uncle seriously injured. Without any guarantee of a financial recovery, they went out and hired accident investigators and engineers to help prove how the accident happened. I am grateful that they worked on a contingency fee basis as there was no way we could have paid for these services on our own.

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Jonathan helped my family heal and get compensation after our child was suffered a life threatening injury at daycare. He was sympathetic and in constant contact with us letting us know all he knew every step of the way. We were so blessed to find Jonathan!

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Jonathan did a great job helping my family navigate through a lengthy lawsuit involving my grandmother's death in a nursing home. Through every step of the case, Jonathan kept my family informed of the progression of the case. Although our case eventually settled at a mediation, I really was impressed at how well prepared Jonathan was to take the case to trial.

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