Life Insurance Claim Denied? Here are common reasons why life insurance companies deny claims.
You buy a life insurance policy to provide your family with the death benefits they will need to pick up the pieces after your untimely passing. There are several different reasons why your policy will not provide a pay-out to your loved ones. Understanding these reasons may help you lower your risk so your family won’t have to worry about denied life insurance claims when they file their claim.
Here are 7 reasons why your life insurance claim could be denied.
Less Than Honest About Prior Bad Habits
Prior bad habits like smoking and drinking can lead to claim denial as these have long-term effects on your health. It’s important to be as honest as possible about how much you smoked or drank and for what length of time. If it is uncovered that you have been dishonest about your prior habits, your family’s claim will be denied.
Suicide is a common event that is not covered by your life insurance policy. A suicide clause is in place to help deter people from taking their own lives. Many states allow for a suicide clause. With this type of clause, your family would only be eligible to receive the amount you paid in premiums instead of the full death benefit.
Because life insurance is based on risk, if you pass away while performing life-threatening activities that you know may result in your death, your family’s death benefits claim may be denied. If you participate in these activities regularly, it is essential to discuss this with your agent. It may raise your premiums, but at least you will have coverage.
You are not allowed to benefit from illegal activity, no matter what the situation is. If you are killed while committing a crime, your family will not be eligible to cash in your life insurance policy. Illegal activity negates your life insurance policy and will prevent anyone from collecting the death benefit.
Before a life insurance death benefit is paid, an investigation will be performed. If you were exposed to any type of risk that you did not claim on your application, the insurance company may claim fraud and deny your family’s claim when they file for the death benefit.
Act of War exclusions are for civilians, not soldiers. When civilians or people are sent to war-torn areas for their jobs or go of their own free will, they put themselves in harm’s way. This level of risk could be so great that your insurance company may not pay your family your life insurance policy’s death benefit if something were to happen to you.
Living in a Foreign Country
Insurance companies based in the United States may not pay out a death benefit if the person has moved out of the country and no longer has a valid American address. Therefore, people who plan on moving out of the country may want to cash out their life insurance before they make that final move.
It’s essential to understand what a life insurance policy does not cover, as well as what it does. At Reardon Agency Insurance, our agents understand that sometimes it’s best to know what a policy does not cover. When you are ready to purchase your first life insurance policy, talk to us! We have the answers you are looking for. Many of the activities that we consider to be fun and exciting can be more dangerous than we realize. Our agents will help you go over everything about your life insurance coverage so that your family won’t have any surprises if the unthinkable occurs.
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