Why do life insurance companies reject claims?
Many well-meaning individuals who are breadwinners to their family members insure their lives. They understand that it is not possible to be too careful when death is concerned.
So out of genuine love for their family, they insure their life. Hence, even if they pass on, their family has great financial coverage since their demise would be detrimental to their family members through life insurance. However, as every enterprise has its pros and cons insurance companies also have theirs. A large part of which is embedded in their rules and regulations.
Anyone seeking to insure his or her life must first ensure that he understands and follows the laid down rules of the insurance company. He must follow these rules hook, line, and since any breach on his or her part can cost their insurance. Or put better, can lead to a rejection of claims. But how can you avoid that? Let’s find out.
Life Insurance Lawyers: Do You Need One?
Life insurance is not something to gamble with. Every little omission can cost you years of saving for your loved ones. So, you need an experienced attorney to guide you through the process.
Contacting experienced insurance attorneys has saved a lot of people from the rejection of claims. However, it is suggested to reach out to a life insurance lawyer and talk about the boundaries of your life insurance policy so that your nominee’s claim will not be rejected. Under their care and supervision, you can be sure to get the best out of your life insurance.
Factors That Cause Insurance Companies to Reject Claims
In life insurance, death must not be facilitated in any form. When a person commits suicide, he terminates his life insurance because he has facilitated his death. This is enforced so that the abuse of claiming insurance policies will be avoided.
Just as in suicide, drug overdose or any form of intoxication which leads to death often nullifies life insurance. This is because these types of death do not fall under the valid claim category for life insurance companies. So, if you wish to insure your life and benefit from it, ensure you take active steps to minimize self-facilitated death.
False Health Information
Insurance companies uphold full disclosure amongst other things. Trust and complete disclosure of all material facts are paramount to the insurance industry. Concealing information can lead to the rejection of the claim.
Oftentimes, clients hide their unhealthy habits like excessive drinking and smoking while filing the insurance application. Concealing or giving false information on habits like these can lead to the rejection of claims.
No matter how trivial you consider the information to be, you should communicate with the company because you don’t want to leave a lacuna that will be detrimental to you.
A good example of information that may be considered trivial is your weight and height. As trivial as they appear it can cause a denial of claims when your family needs the insurance benefit. It has also been observed that sometimes these omissions are not intentional but still lead to the denial of a claim when the company discovers the omission.
You must fill out your life insurance application in a calm and relaxing space. So you do not make any mistakes. It is very important to be alert and honest when filling out the application.
Late Payment of Premiums
Getting suitable life insurance coverage is an important step in getting life insurance. Paying up your premiums regularly and at due dates is another key step to avoiding denial of claims.
A life insurance policy stops being active when you miss paying a premium on time. Usually, the insurance companies give some days of grace to the client. The number of days might differ slightly according to company policy.
However, once the days of grace elapse, all prior paid premiums go down the drain. There is usually a no-refund policy for these companies. So, in order not to lose your already paid premiums, ensure you keep up with prompt payments.
Invalid Nominee Details
Always ensure that your nominee details are up to date and accurately filled in. The nominees usually receive all benefits arising from insurance coverage.
If your initial nominee has passed away, endeavor to change your nominee details to a living person because the deceased cannot receive insurance coverage and only the nominee can receive these benefits. No one else, not even a close relative of the nominee. This leads to denial of the claim when you are no more.
The Type of Death Isn’t Covered
Not all types of death are insured by insurance companies. When death results from a means not speculated by the insurance agreement, denial of claims most times follows. This singular rule has become a cause for concern for a lot of people. However, this is the rule for insurance companies and a breach leads to the denial of claims.
It is a short period in which, if the client dies, the insurance company would launch an investigation contesting the cause of death. Where the death is found to be self-induced, the claim can be rejected. For some insurance companies, the contestability period is one year, while for others, two years.
Asides from these reasons that can lead to the rejection of claims, there are others. You would need a good insurance attorney to discuss this with you. You can be certain that all insurance rules and regulations would be explained to you. This will help make important decisions while taking life insurance. A life insurance claim lawyer can help you out to insure your life with an in-depth understanding.
Losing a loved one is already hard enough, thus, in getting your life insurance policy, you must make sure that the recipient of your insurance money will not be rejected when they try to claim it. Be sure to check your insurance policy’s rules and talk to a life insurance lawyer to know the precautions.