Life insurance claims are usually not denied, especially if the policy has been in force for over 2 years.
If a policy has not been inforce for two years, a claim may be denied for a material misrepresentation of fact. Which means you did not disclose fully something that could have affected the underwriting of the policy. Not declaring you were a smoker for example. Or if death is by suicide the claim will be denied if within 2 years (In Canada)
If the policy is over 2 years old the insurance company has to prove fraud which is difficult to prove.
If the policy contains exclusion such as death while skydiving, no coverage for that event.
If you have any further questions, or feel I could be of assistance, please do not hesitate to contact me.
Co-Founder, TermInsuranceBrokers.com, Goldenzweig Financial Group, Las Vegas, Nevada
When a claim is denied, it's usually because the death occurred within the first 2 years of the policy (known as the contestability period) and it's discovered the applicant intentionally lied on the application to get the coverage or the insured person committed suicide.
Once the contestability period expires, however death occurs, the policy will pay out a death benefit.
Other situations where there may be a payout may be denied is if death occurred form an act of war or there was an exclusion rider on the policy (e.g. aviation exclusion for recreational pilots).
I hope the information is helpful - please feel free to contact me for help and if you have any other questions. Thanks very much.
Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
Life insurance companies issue contracts. There are requirements for the company and there are requirements for the customer. If the customer commits suicide in the first couple of years most companies can, by contract, deny the death benefit. If there has been an attempt to defraud the company the claim can be denied. Very few claims are denied. Law suits often accompany a denial.
In addition to the excellent explanations offered by the other agents on this page, life insurance claims are sometimes denied due to the nature of the policy.
If you purchase a graded policy, it will pay a reduced benefit for death due to natural causes during the first 1-4 years. With that type of policy, death due to accident will usually pay 100% from day one. Sometimes accidental death is actually caused by a health condition (e.g. heart attack while driving a car). When the claim is denied, it can come as a surprise because survivors were not aware that the policy was a graded during the first two years, and/or that the root cause of death was determined to be natural vs accidental.
The same is true for people who think they are buying life insurance, when they are actually buying accidental death insurance. You need to be very careful about what type of policy you are getting so that your claim is not denied simply because you purchased the wrong type of policy.
A final, common reason for denial of claims is late premium payments. In our office, we spend a lot of time each week reminding people whose policies have entered the grace period, that they need to pay their premium or lose their coverage. But many agencies due not send reminders, and it is easy to lose track of addresses, phone numbers, and email address of clients because people change those frequently in today's society. At the very least, keep your address up to date with the insurance company so that you will receive any late notices and keep your policy in force for the time of need.
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If a policy has not been inforce for two years, a claim may be denied for a material misrepresentation of fact. Which means you did not disclose fully something that could have affected the underwriting of the policy. Not declaring you were a smoker for example. Or if death is by suicide the claim will be denied if within 2 years (In Canada)
If the policy is over 2 years old the insurance company has to prove fraud which is difficult to prove.
If the policy contains exclusion such as death while skydiving, no coverage for that event.
If you have any further questions, or feel I could be of assistance, please do not hesitate to contact me.
Once the contestability period expires, however death occurs, the policy will pay out a death benefit.
Other situations where there may be a payout may be denied is if death occurred form an act of war or there was an exclusion rider on the policy (e.g. aviation exclusion for recreational pilots).
I hope the information is helpful - please feel free to contact me for help and if you have any other questions. Thanks very much.
If you purchase a graded policy, it will pay a reduced benefit for death due to natural causes during the first 1-4 years. With that type of policy, death due to accident will usually pay 100% from day one. Sometimes accidental death is actually caused by a health condition (e.g. heart attack while driving a car). When the claim is denied, it can come as a surprise because survivors were not aware that the policy was a graded during the first two years, and/or that the root cause of death was determined to be natural vs accidental.
The same is true for people who think they are buying life insurance, when they are actually buying accidental death insurance. You need to be very careful about what type of policy you are getting so that your claim is not denied simply because you purchased the wrong type of policy.
A final, common reason for denial of claims is late premium payments. In our office, we spend a lot of time each week reminding people whose policies have entered the grace period, that they need to pay their premium or lose their coverage. But many agencies due not send reminders, and it is easy to lose track of addresses, phone numbers, and email address of clients because people change those frequently in today's society. At the very least, keep your address up to date with the insurance company so that you will receive any late notices and keep your policy in force for the time of need.