Life insurance is a wonderful way to give your family a safety net. Even though having life insurance can provide you peace of mind, you might be curious about how frequently life insurance claims are turned down, leaving beneficiaries with nothing.
The good news is that most insurers cover the cost of funerals and other expenses after denying your claim. However, there are some common life insurance rejection reasons. Let’s find out more about them in this blog.
Can Life Insurance Companies Deny Claims?
Life insurance companies can indeed deny claims. However, this is usually only done in extreme cases and for specific reasons.
For example, suppose you have a pre-existing condition that would make it difficult to get life insurance coverage (such as cancer or heart disease). In that case, your insurer might decline your claim because they don’t want to be held responsible for covering the costs of medical expenses after you die.
Another reason why insurers might reject a claim is if the beneficiary has too many dependents or if they have a bad credit history. However, the most common reason why life insurance companies might deny your claim is if you haven’t paid enough premiums to cover the death benefit in case of an accident or illness.
Reasons for denying life insurance claims
Following are a few life insurance rejection reasons:
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Keeping a medical condition or other relevant information a secret
Suppose you were diagnosed with cancer or heart disease before purchasing your policy. In that case, the insurer might decline your claim because it’s difficult to predict how long you will live and whether or not you’ll be able to pay the premiums after death.
If this happens, you must tell your agent about any medical conditions so that they can make sure that there are no hidden conditions that could make it difficult for you to get life insurance coverage.
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No premiums for life insurance were paid.
If you don’t pay the premium on time and then pass away before paying off your debt, the company might deny your claim because they won’t be able to collect any money from you.
If this happens, you must ensure that you keep up with all the payments so there are no late fees or penalties. If you are unsure if your life insurance company will decline a claim, it’s best to call them and ask them directly.
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A term life insurance policy being outlived
If your term life insurance policy is outliving its expiration date, then it’s likely that your insurer will decline the claim.
For example, if you are on a 10-year term and it expires in 5 years, your company might decline your claim because they don’t want to be held responsible for covering the medical expenses of someone who has died.
Conclusion:
If your life insurance policy is not up to date, then it’s likely that your company will decline the claim.
This blog discusses why insurers deny life insurance claims—looking for life insurance for yourself? Contact our experienced agents at Gee Schussler Insurance, who can help you through this process.
