A recent ABC-TV newscast showcased a valid life insurance claim wrongfully denied. The insurance company later corrected the situation citing an error by their third party administrator. Unfortunately, third party administrators do not fall under the umbrella of state insurance commissioner regulation. As of late, there has been a surge with insurance companies denying claims on life insurance and other policies such as long-term care insurance, health insurance, disability insurance, homeowners and business insurance policies.
To avoid leaving your life insurance beneficiaries in financial debacles, it is suggested you follow the below recommendations:
- Check the license of the insurer with your state's insurance regulator.
- Read and understand your policy.
- Check insurer financial strength.
- Check insurer rating given by rating agencies.
- Does your State's guaranty association ensure your policy against insurer bankruptcy?
- Check complaints against the insurance company.
- Besides the named beneficiaries, do you have any contingent beneficiaries?
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