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Common Reasons for Life Insurance Claim Denials or Delays

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Common Reasons for Life Insurance Claim Denials or Delays

When your loved one passes away, you might feel a semblance of relief that they had life insurance coverage that can help your family deal with the losses from a financial standpoint. You might never imagine that your life insurance claim would be denied, but insurance companies do find reasons to deny claims. Some of these reasons are valid, but others are not, and you should always discuss a denial with an Illinois insurance claims attorney

The following are some common reasons why your life insurance claim might be delayed or denied. 

Contestability periods

Often, after you get a policy, there is a time period during which the insurer can contest a claim if the death occurs then. The insurer might claim there were material misrepresentations during the application process, and it can use such claims to deny benefits, even if the death had nothing to do with the claim. For example, if the policyholder lied about being a smoker, the insurer can contest a claim, even if the person died in a car accident. 

Cause of death

Each life insurance policy excludes coverage for certain causes of death. Excluded causes might include:

  • Suicide
  • Alcohol or drug abuse
  • Homicide by a beneficiary
  • Death while engaging in unlawful activity
  • Death during high-risk activities, such as skydiving

Different policies have different exclusions, so make sure you are aware of what your policy excludes.

The policy lapsed

If a policyholder misses premium payments, the life insurance policy can lapse or be terminated. Nonpayment is a common reason for denials, but it is not always a valid one. Your attorney can determine whether the insurance company sent proper notices to the policyholder prior to the lapse. 

Beneficiary issues

There are many issues that can arise due to how a beneficiary is designated on the policy. Some issues that might cause delays, if not denials, include:

  • No beneficiary was named
  • The beneficiary was not properly updated following a divorce or another major life event
  • The beneficiary is a minor who cannot directly receive the funds
  • The beneficiary is a trust, or the policy was included in the terms of a will or trust
  • There was only a primary beneficiary named, and they are not available
  • The beneficiary is “children” or another group of people instead of specific names

If you run into any beneficiary-related issues, contact a lawyer who can help you resolve the matter as soon as possible to minimize delays.

How an Illinois Insurance Claims Attorney Can Help

If you are having difficulties getting life insurance benefits or the insurance company denied your claim, do not give up hope. There are many ways that you can appeal the decision or address complications with the right legal assistance. At Anspach Law Office, we regularly help clients who are facing challenges in receiving their rightful life insurance benefits. 

After the loss of your loved one, let us help. Contact us today to discuss your situation and how we can assist you. 

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