Learn About AAA denied life insurance claims
Losing a loved one is hard enough, but it can be even harder if their life insurance claim is denied. You may wonder why this happened and what you can do about it. Different life insurance policies have different rules that can affect the payout, but sometimes you may have a chance to challenge the denial. Here are some of the common causes of life insurance claim denials and how to avoid or overcome them.
Why your claim may be denied
Life insurers may deny a claim for various reasons, such as:
- Policy delinquency: This means the policyholder did not pay their premiums on time and their coverage expired. If they die without an active policy, their beneficiaries will not get any money. This is a frequent reason for claim denials. Sometimes, the policyholder may not realize their policy has lapsed or may forget to tell their beneficiaries about it.
- Material misrepresentation: This means the policyholder lied or hid something important on their application, such as their health condition, smoking habit, weight, income, occupation, hobbies, or other life insurance policies. This can make the policy invalid and lead to a claim denial after their death. It is very important to be honest and accurate when applying for life insurance.
- Contestable circumstances: This means the policyholder died in a way that is not covered by the policy, especially if it happens within the first two or three years of the policy. This is called the contestability period, and it allows the insurer to investigate the claim for any fraud or misrepresentation. Some of the situations that may trigger a claim denial are suicide, death by crime, death during military service, death by flying, or death from certain diseases like HIV.
- Documentation failure: This means the beneficiaries did not provide the required documents to prove the death and claim the benefit. The insurer usually needs a death certificate at the minimum, but may also ask for other documents like medical records, police reports, or autopsy results.
Why the contestability period matters
The contestability period is like a trial period for the new policy. It gives the insurer the right to check the policy and the claim for any errors or fraud. If the policyholder dies within this period, the insurer may delay or deny the payout until they complete their investigation. However, if they find no evidence of wrongdoing, they should honor the claim. If the policyholder dies after this period, the insurer cannot contest the claim unless they suspect fraud.
What to do if your claim is denied
Getting a claim denial letter can be very upsetting and frustrating, especially if you depend on the life insurance benefit for your financial security. However, you may have some options to fight the denial, depending on the reason and the circumstances. Here are some steps you can take:
- Review the policy and the denial letter carefully: Make sure you understand the terms and conditions of the policy and the reason for the denial. Look for any errors or inconsistencies in the information or the documents. If you have any questions or doubts, contact the insurer and ask for clarification.
- Gather evidence and documentation: If you think the denial is unfair or incorrect, you need to prove your case with relevant evidence and documentation. For example, you may need to show proof of premium payments, medical records, witness statements, or legal documents. The more evidence you have, the better your chances of reversing the denial.
- Appeal the decision: Most insurers have an internal appeal process that allows you to challenge the denial. You need to follow their instructions and submit your appeal within the deadline. You should include a letter explaining why you think the denial is wrong and attach all the evidence and documentation you have. The insurer will review your appeal and notify you of their decision.
- Seek legal help: If the insurer rejects your appeal or you are not satisfied with their response, you may want to consult a life insurance law firm. They can advise you on your legal rights and options and help you file a lawsuit against the insurer.