Why Was My Life Insurance Claim Denied?

Misrepresentation refers to when a beneficiary has a life insurance claim denied because the insurance company alleges that the deceased did not fill out their policy application truthfully.

In these cases, the insurance company will ask the beneficiary to sign an authorization for the release of the insured-decedent’s medical records. Importantly, the records they will obtain are not simply what the insured died of, but also medical records to see what medical issues the insured knew and when they knew it.

With such information, the insurance company may assert the insured did not accurately answer the medical questions in the application, and seek to rescind the policy by claiming they would not have taken on that risk, or would have charged a higher premium had they known the actual information. 

If misrepresentation is the reason why you had your life insurance claim denied, it is important to know that there are still ways to obtain your settlement. Illinois law restricts the insurer from voiding the policy in several important ways.

First, the misrepresentation needed to have been made in the application, and the application must be attached to the policy.

Second, the misrepresentation will not be a basis to contest and avoid the policy once the policy had been in effect a certain period of time according to statute. After that period ends, the policy becomes incontestable.

Third, the misrepresentation in many cases has to be material, meaning the insured actually died of what the insurance company is claiming was misrepresented. This means if the policyholder died of a heart attack, a misrepresentation in the application that they had never been diagnosed with cancer is not material, and therefore not a valid reason for you to have had your life insurance claim denied. 

Fourth, the misrepresentation needed to be within the insured’s knowledge, meaning that the medical records may say something the insurer claims shows a particular disease, yet the records themselves may only show a test was being performed for that disease without actually showing the insured knew he or she had or was being treated for that disease.

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Another common reason why beneficiaries have their life insurance claim denied is because of an unpaid premium. There are many exceptions that an experienced life insurance lawyer can use to argue against these claim denials, and obtain fair settlements for policyholders.

Term life insurance policies in Illinois do not simply lapse or terminate after non-payment of a premium. First, there is a mandatory 30-day grace period within which to make up the missed premium. If the insured dies within the grace period then the benefits are owed to the beneficiary and the defaulted premium is deducted from the death benefit. 

Illinois law also requires insurers of policies payable by quarterly or less frequent payments to give a very specific notice prior to declaring a life policy forfeit and terminated. In the absence of this required notice, Illinois law mandates a six-month nonforfeiture period within which the insurer cannot declare the policy forfeit, and if the insured dies within that six months, then the death benefits are owed.

Unfortunately, a beneficiary may incorrectly believe the policy had already terminated because of the non-payment of premium, and insurance company correspondence indicating the policy is terminated prior to the death of the insured. If the notice was improper, however, then the benefit may still be owed if death occurred within these six months, even though no claim was ever made. 

The beneficiary may even forego making a claim within the 30-day grace period or six-month nonforfeiture period, because they believe the insured intended to let the policy lapse by non-payment.

For example, the insured decides they cannot afford the premiums any longer and intentionally lets the policy lapse. That intent is irrelevant because they still had the thirty days or six-months to change their mind, but died in the meantime, making the claim payable. Perhaps they threw away the policy and is nowhere to be found in their loved-one’s papers. This might require suit to be filed to obtain a copy of the discarded policy.

Illinois law allows lawsuits for breach of contract to look back ten years, so if your loved one passed away within six months of a lapse by non-payment of the premium, you may still be able to collect the life insurance benefits within ten years. Fill out my free consultation form today so I can begin reviewing your case with you.

When there is a different name on the policy than on the death certificate, usually claimants do not have their life insurance claim denied, but rather do not get their claim paid due to a never-ending investigation.

What can be tricky about such a situation is that the insurance company may simply neglect to respond to your claim, which leaves you in a state of limbo wondering where your life insurance settlement is.

In these cases a life insurance attorney can help straighten out the problem, and assist you with getting the name changed by amending the death certificate. 

Policies often have exclusions for suicide. In that case, the beneficiary will have their life insurance claim denied, but the insurance company must return all paid premiums.  Often, however, the only one alleging that the death occurred by suicide is the insurance company. The law makes certain presumptions against death being suicide, assuming people want to live.

Another circumstance is an overdose, and the insurance company asserts it was an intentional act of taking too much so therefore suicide, but the law says the insurance company must prove the insured intended to die, not that they intended to take what caused the overdose. If that is the case, then as a life insurance attorney I can investigate the facts and often litigate whether the death was in fact caused by suicide.

Some life insurance policies only insure against accidental death. These policies are often much cheaper because there are so many ways to die besides by accident. In other words, the policy only covers a very unlikely type of death.

These policies often have a list of exclusions such as death caused by intoxication, while in military service, and for health related issues. The insurer may deny the claim if alcohol shows up in any post-accident testing. In that case, the insurer also needs to show the death results from the intoxication because Illinois does not allow exclusions based on “status” of the exclusion, only exclusions based on death being the “result of” the exclusion. These cases can be fact specific, so you likely need an attorney with experience handling them.

In some cases, the decedent may have died because of injuries sustained in an accident, yet the insurance company asserts a later infection while in the hospital causes the death was not covered because death did not occur immediately following the accident. Another scenario is a driver that crashes into another vehicle and autopsy discovers they had a heart attack. In that case, determining if the claim was payable requires figuring out if the heart attack preceded the crash, supporting the exclusion for medical related causes, or if the crash occurred first and having struck the steering wheel caused the heart attack, making it a payable claim.

In cases where the deceased possessed accidental death and dismemberment insurance, and the beneficiary had their insurance claim denied, a life insurance attorney can be extremely helpful in litigating on the beneficiary’s behalf to obtain a fair settlement.

A common reason that beneficiaries have their accidental death insurance claim denied is alcohol. Most states require testing for alcohol and drugs after any accident where death occurred. If alcohol is found, the insurance company may argue that the alcohol is what caused the death, so therefore the intoxication exclusion defeats coverage.

An experienced accidental death insurance claim lawyer can get involved and, depending on the case, argue that the death was not caused by the alcohol, the alcohol by itself is insufficient to show intoxication, or that the test itself was taken post-mortem and unreliable for various reasons, and therefore get their clients claim paid. If you had your accidental death insurance claim denied because of alcohol, don’t give up hope, fill out the consultation form below and I will assess your case free of charge, and determine if I can help you. 

Familiarizing yourself with common reasons why life insurance claims get denied and how those denials can be appealed is an important step in empowering yourself to stand up against your insurance company. The best way, however, to ensure you get a fire life insurance settlement is to hire an experienced life insurance lawyer who will work for you on a contingency basis, meaning you don’t pay unless you get paid. Fill out my consultation form below for a completely free case evaluation so I can determine how I can help you today.