It’s never a comfortable time to talk about this subject, but it is a conversation that needs to be had. Losing a loved one or the thought of our loved ones mourning for us is one of the hardest things to go through. However, what is even more problematic is not having a plan in place for the day it could happen.
Not having a plan just makes things harder to resolve for everyone. When the family is denied the life insurance benefits, they will need to help fill the financial gap.
But what could cause this to happen in the first place? Below you’ll see why and how you can avoid it beforehand.
When you falter on payments
A life insurance claim might be denied when we begin to falter on the policy’s payments. Late payments are something that we're all familiar with, and when it comes to life insurance, once a payment is late, the policy's coverage is temporarily taken away. The insurance companies understand this dilemma and thankfully allow the insured a grace period to pay back what is owed to avoid policy coverage expiration.
Your application is incomplete or incorrect
When you fill out any kind of application, it is always best to put all the essential information on the document. When it comes to life insurance, if you leave anything out, then there's a good chance that when a claim is made, the claim will be denied, keeping the family from gaining access to the policy benefits.
A suicide occurring during the contestability period
While suicide is a tragic event that happens to families, it doesn't automatically mean that beneficiaries will be denied after submitting a claim.
Whenever you decide to take out a life insurance policy, a contestability period is put in place. Depending on the insurance provider, this time frequently lasts around two years. The insurer uses this time to make sure that everything is in order after you applied.
If suicide were to occur within this period, the beneficiaries would have the premiums already paid returned to them instead of having access to the policy's benefits.
The best thing you can do here is consulting with an experienced attorney and read the fine print.
A case of intoxication or overdose
Another aspect has to be investigated before your insurer can justify denying a benefits claim related to the stipulations outlined in the policy. For example, the insurer may find just cause to reject any insurance claim if the death was proven to have been caused by intoxication or an overdose.
However, if alcohol was found in the person's body but not directly linked as the cause of death, it is unlikely for a claim to be rejected. The same also applies if the person had a bad reaction to a drug while under the care of a physician.
Again, this is why it is essential to read the fine print and consult an attorney before you decide which life insurance company you choose to go with and check the laws of your state.
Lastly, it may be a good idea to hire a lawyer to help you out when trying to fight a claim. While that may sound costly, there are ways to get around this and avoid any unnecessary stress.
Luckily, attorneys offer options of payment depending on your financial situation at the time. Two of the most common options are either you pay the attorney’s hourly wage, or you agree to pay them a small portion of the insurance benefits if you decide to pursue the case.