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A loved one has died, and you discover you are the beneficiary of a life insurance policy. You file your claim, but it is denied or delayed for some reason. What to do?

Six Reasons an Insurance Company Will Deny a Claim

Let’s face it - insurance companies only make money when they DON’T pay claims, so they have no incentive to pay and will take advantage of any and every opportunity to deny a claim.  According to an expert life insurance attorney, here are the top six reasons claims are denied:

 The policy lapsed or the insured fell behind in paying premiums.

Insurance companies will not make it easy for you as beneficiary if the policy lapsed or the insured fell behind in paying monthly premiums. However, it still may be possible to recover your claim, if any of the following applies:

  • The policy has a clause that waives premiums if a person becomes disabled. 
  • A grace period applies to the missed premium payments.
  • An administrative error was made by the servicer of the policy that caused the underwriter to deny the claim.

An experienced life insurance attorney can help you find out if your claim should have been paid based on these factors.

The death of the insured fell within policy exclusions.

It is common for a policy to exclude certain types of deaths, including but not limited to:

  • Death by suicide
  • Death by drug or alcohol overdose
  • Death by act of war or terrorism
  • Death in a foreign country
  • Death during some activity explicitly listed in the policy (scuba diving, mountain climbing and the like) 

In these cases, a full investigation and autopsy are performed. You would be wise to have an attorney represent you and deal with the insurance company’s investigative team, as again, the insurance company has no incentive to find facts that favor paying on your claim.

Misrepresentation by the insured.

All policies have a clause that states that if the insured lies on the application, the policy is void. For example, if the insured states that he or she does not smoke, but actually does smoke, and the insured dies from something related to smoking such as lung cancer, this may void the policy. Even if this is the insurance company’s initial determination, there is always an argument that the non-disclosed behavior did not contribute to the death, however, this is an uphill battle to fight.

Issues identifying the beneficiary.

This occurs often. Any issue determining who the beneficiary is will at the very least delay payment, and may deny payment to someone who thought they were a beneficiary.

Last-minute beneficiary change

One of the beneficiaries cannot be found

One of the beneficiaries is an ex-spouse

The sole beneficiary is deceased

If you believe you are or should have been the beneficiary of a life insurance policy, you should find out if you were named as an irrevocable beneficiary. If you were, that cannot be changed. Unfortunately, people take advantage of seniors with dementia and Alzheimer’s disease and persuade them to change their beneficiary designation.  If you were originally named an irrevocable beneficiary, you must challenge this beneficiary change.

Employer issues

Free employer-provided group-term life insurance is generally thought to be a good thing! However, if the insured had a policy with a former employer and left that job, the employer was under no obligation to continue paying on that policy and the policy may have lapsed. The date of death and the applicable grace period will be important facts to know in challenging claim denial on this basis.

Conversion issues

This is related to #5, Employer issues because when the insured left that place of employment, he or she would have been given the opportunity to convert their group life insurance to an individual policy. If the insured failed to do this, or if there was a flaw in the paperwork, there might have been no conversion.  Again, you need to know the date of the policy lapse and the date of death and find out if any grace period might apply.

Four Reasons an Insurance Company Will Delay Paying Your Claim

Delays occur when a life insurance company needs to investigate a claim. This could occur if: 

There is a beneficiary dispute. This is very common.  If the named beneficiary is contested the insurance company has leave to delay payment as long as it needs to settle the matter.  Again, there is no incentive for the insurance company to pay out quickly. 

The insured died within the contestability period. If the insured dies within two years of the date that the policy was issued, the insurance company may investigate for evidence of fraud or misrepresentation. 

The insured died by homicide. If the insured dies by homicide, the insurance company will likely wait to pay any benefits until the police complete their investigation. 

The insured died in a foreign country.  Delays in determining the cause of death and obtaining a death certificate will delay payment on a claim.

If you’ve received notification that your life insurance claim has been denied or delayed for any of the above reasons, there is still a chance you could get paid - do not accept no for an answer. Contact an experienced life insurance attorney to help you fight for your rights as a beneficiary.

Veronica Baxter is a freelance writer and legal assistant operating out the greater Philadelphia area.


Reasons a Life Insurance Claim is Denied or Delayed
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