Common Reasons that Life Insurance Claims are Denied

J.P. Gonzalez-Sirgo
Founder of J.P. Gonzalez-Sirgo, P.A.

A heartbreaking situation our Florida law firm sees far too often involves a family hit with the news that a loved one’s life insurance benefits will be denied.  These funds frequently are needed to bury a loved one and provide for the immediate needs of surviving family members. These grieving families must process the (sometimes) unexpected death of their loved one while making immediate financial decisions that they believed would be handled by the deceased life insurance policies. Even with the assistance of our firm, it can take weeks or months (or even longer in some cases) before a wrongfully-denied life insurance claim is paid out.  It is far better to avoid making common mistakes that cause life insurance claims to be denied in the first place.

Misstatements on Your Application

One of the most common reasons why life insurance claims are denied is because the policyholder makes a material misstatement on his or her application. If an insurance company issues a life insurance policy to a policyholder based on false information, then the life insurance company can use that as a basis to deny the claim and/or terminate the policy once the false information is uncovered. False information generally must be material in order to trigger these consequences.  In other words, the information must be of such a nature that had the insurance company known the truth, the carrier would not have approved the policy.  For example, a person who states on his application that he has never been diagnosed with cancer but is fighting cancer can have his or her policy cancelled and any benefits under the policy denied if the company discovers the deception.

Death Shortly After Purchase of the Policy

Except where the deceased has caused his or her own death, no one knows the exact hour he or she will die. Although it is not commonplace, policyholders have perished within weeks or months of purchasing a new life insurance policy. When this occurs, the life insurance company may be particularly inclined to review the policy application and statements made therein for potential fraud or abuse.  In these situations, the insurance company may take a very close look at the policy and determine fraud exists even though no fraudulent statements were made by the insured.

Death in a Manner Not Covered by the Policy

A life insurance policy is a contract between the insured and insurer.  The parties to the contract can agree to the circumstances under which benefits will and will not be paid.  If the deceased passes in a way that is specifically excluded by the terms of the policy, then this can be a basis for denying the insurance claim. For example, most policies do not provide benefits where the policyholder commits suicide within a year or two after purchasing the policy. Similarly, no benefits will be paid to a beneficiary of the policy who deliberately kills the policyholder.

What Can Beneficiaries Do if the Life Insurance Company Refuses to Pay Benefits Owed on the Policy?

Our Florida law firm has helped numerous clients throughout the state successfully contest a life insurance company’s denial of benefits.  Sometimes these claims are denied based on a simple misunderstanding that is easily corrected.  We might use more aggressive negotiations and/or litigation to pursue a fair and just resolution. The Law Firm J.P. Gonzalez-Sirgo, P.A. offers free consultations and case evaluations. No Recovery, No Lawyer Fees. Call 305-461-1095 or Toll Free 1-866-71-CLAIM.

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