Our life insurance lawyers in South Dakota handle delayed and denied life insurance claims, AD&D claims, beneficiary disputes and South Dakota interpleader lawsuits.
Mental health can be a reason for a denied life insurance claim under certain circumstances. Life insurance companies assess various factors, including an applicant’s medical history and overall health, to determine the risk they pose. While mental health conditions alone typically won’t result in a denial of coverage, there are situations where they can lead to a claim denial or limitations on the policy. Here are some scenarios in which mental health can impact a life insurance claim:
Non-disclosure or Misrepresentation: When applying for life insurance, applicants are required to provide detailed information about their medical history, including any mental health diagnoses or treatments. If an applicant fails to disclose a known mental health condition or provides false information on the application, the insurance company may deny a claim if the condition is discovered later. This can be seen as material misrepresentation, and it can lead to a policy being voided or a claim being denied.
Recent Diagnosis or Treatment: Life insurance companies may be cautious when an applicant has been recently diagnosed with a severe mental health condition or is currently undergoing intensive treatment. In such cases, they may postpone or deny coverage until the condition stabilizes or treatment is completed.
High-Risk Mental Health Conditions: Some severe mental health conditions, such as schizophrenia, bipolar disorder, or substance abuse disorders, may be considered high-risk by insurance companies. In such cases, the insurer may offer coverage but with higher premiums (substandard rates) or exclusions related to the mental health condition. In extreme cases, they might deny coverage altogether.
Suicide Clause: Most life insurance policies have a suicide clause that specifies a waiting period (usually two years) during which the policy will not pay out in the event of the insured’s suicide. After this waiting period, the policy typically pays out the death benefit, even in the case of suicide. However, if the suicide occurs within the waiting period, the claim may be denied.
Contestable Period: In the early years of a life insurance policy (usually the first two years), insurers have the right to contest claims based on any material misrepresentations or undisclosed health conditions, including mental health issues. If the insurer discovers such issues during this period, they may deny the claim.
It’s important to note that the specific terms and conditions of life insurance policies can vary significantly between insurance companies and policies. Therefore, it’s essential for applicants to fully disclose their medical history, including mental health, during the application process and carefully review the policy terms to understand how mental health conditions may be treated. Additionally, individuals with pre-existing mental health conditions may want to work with an insurance agent or broker who specializes in finding coverage for such cases or explore options like guaranteed issue or simplified issue policies, which have less stringent medical underwriting.