Life Insurance Claims
Whether you are a child who lost their parent, or your spouse just passed away, life insurance is upsetting to deal with. What makes it even worse is if your insurance company won’t hold up their end of the deal.
The point of life insurance is to ease the burden of costs associated with death. You make life insurance payments every month in exchange for financial security for your loved ones when you die. So when a life insurance claim is delayed or denied, it’s just one more thing to deal with.
Legitimate Reasons For Claim Denial
After a death, the deceased’s loved ones are left to pay for the funeral, the burial, and life beyond. This is where a life insurance claim comes into play. When your loved one passes away, you need to file a claim with their life insurance company. This process involves providing evidence such as a death certificate before you can receive any money.
Not everything is always smooth sailing, however. Your life insurance claim could be denied. There are actually some valid reasons this may happen.
- The death was by suicide and within two or three years of purchasing the policy. The exact timeline depends on the policy, but this rule is there to prevent people from purchasing a policy and then taking their own life to get their family a payout.
- The claim falls under the contestability clause. This clause also lasts around two years, depending on the policy, and allows the insurance company to contest a claim for various reasons.
- Medical conditions were not disclosed. If the deceased had underlying medical conditions and did not tell the insurance company, that could be a legitimate reason to deny your claim. This can include prescriptions and family health history.
- Payments weren’t made. If the deceased had not been paying their life insurance payments, the claim may be denied. Most insurance companies have a grace period of 30 days, and depending on the company and state, you may still be able to make up for missed payments after your loved one passes.
- Risky activities were not disclosed. This could include a dangerous job (like firefighting), dangerous hobbies (like skydiving), or risky behaviors (like smoking or DUI convictions).
- You outlived your policy. If you have term life insurance, make sure it covers an appropriate amount of time.
Unfortunately, sometimes insurance companies deny a valid life insurance claim. The company might decide to prioritize their own profits over the needs of the person making the claim.
Bad Faith Life Insurance
Your life insurance company has a duty to put you and your loved one’s interests first. They must grant you insurance coverage whenever eligible and possible.
Here are some examples of insurance companies acting in bad faith:
- They deny your valid claim without explanation. Even if your insurance company has a valid reason to deny your claim, they must give you an explanation. It is the insurance company’s responsibility to explain why they are denying a claim. You have the right to challenge their decision.
- They terminate your claim without explanation. If your insurance company cancels your claim or cancels your policy altogether, this is acting in bad faith. They cannot cancel your insurance policy on you, and you have every right to file a claim. Some insurance companies may use complicated jargon so that you won’t question them, or they may just stop communicating with you. If this happens, ask that they give you a claim denial in writing.
- They underpay on your claim. Some insurance companies might make you a much lower offer than you deserve. This tactic works because many people don’t know how much compensation they qualify for. Sometimes the insurance company might say that your claim isn’t covered under your policy, in order to get you to accept a low offer. This is called misrepresenting the policy terms.
- They delay paying you. This is a bad faith tactic to get you to drop your claim. The insurance company might delay payment knowing that you may just give up filing your claim, especially if they start making unreasonable demands for evidence. This tactic can pressure some people into dropping their claim or accepting a much lower offer than they deserve.
Proving Bad Faith
It can be difficult to prove that bad faith occurred if you don’t have a lot of life insurance knowledge.
One red flag to look out for is repetitive requests. If your insurance company keeps asking for the same information or evidence, this could be a bad sign. They may be delaying your claim on purpose to see if you will drop it.
If you think your insurance company is acting in bad faith, a bad faith insurance lawyer can help you determine whether or not your insurance company’s actions qualify as bad faith. If they do, your lawyer will help you file a lawsuit against the insurance company, and hopefully reclaim your deserved compensation.
What Can a Bad Faith Life Insurance Attorney Do?
Your attorney will either file a tort lawsuit or breach of contract claim. A bad faith tort claim must be filed within 2 years from the date you think your insurance company acted in bad faith. If your lawyer recommends a bad faith breach of contract claim, you have 4 years to file the lawsuit.
If your lawsuit is successful, you will recover damages such as…
- Compensation: The amount of money that was originally owed based on the life insurance policy.
- Emotional Distress: Money to cover any damages related to the emotional stress of having a claim denied.
- Other Economic Losses: This could include loss of wages or attorney fees.
- Punitive damages (potentially): Depending on the state, if your insurance company is found to have acted very bad, they could receive punishment. For example, if it is proven that this company acts in bad faith often, they may be punished beyond fulfilling your claim.
In a perfect world, your insurance claims would be fulfilled quickly and easily. However, it is up to you to make sure your life insurance company is holding up their end of the bargain. If you suspect they have acted in bad faith, be sure to contact a bad faith insurance lawyer and get the compensation you deserve.