What To Do When The Life Insurance Company Refuses To Pay

When a family member dies, you probably expect to rely on his or her life insurance to cover the funeral, pay debts, and possibly survive on for a while until you re-establish your life. You don't expect the insurance company to deny the benefits, however. Why could it happen, and what should you do if it does?

The Contestable Period

The insurer can deny you payment for a number of reasons during the "contestable" period of the policy, which is the first 2 years after it is issued.

Most of the time, you can expect an insurance company to investigate to see if the insured misrepresented some material fact if he or she does die during the contestable period. After all, not paying the claim is in the insurance company's best interest.

A material fact is anything that, had the insurance company known about it, would have prevented them from offering the insurance policy to the deceased in the first place. For example, if your loved one died of a heart attack and neglected to disclose to the insurance company his high blood pressure and smoking, they could say that this was a material misrepresentation. If they'd known about high blood pressure and smoking they would have deemed the person too much of a risk for a heart attack to get a life insurance policy.

Honest Mistakes Shouldn't Disqualify Payment

Life insurance applications are often complicated and require the answer to a lot of questions. It's very easy for someone to forget something.

For example, if your father answered that he'd never had a problem with high blood pressure before, but his medical records indicate that his blood pressure was high on a couple of doctor visits, does that mean he lied? No, not really.

Most insurance applications require an applicant to swear that all the information he or she has given is true to his or her "knowledge and belief."

Your father, for example, may have had a couple high blood pressure readings at his doctor's office but was never diagnosed with a blood pressure problem. Perhaps the temporary spike in his blood pressure was a result of pain due to an ear infection or a migraine. In any case, he never took medication for it. So, to his knowledge and belief, your father's blood pressure was fine, and that's what he swore to when applying for the life insurance.

It's improper, then, for the life insurance company to deny his life insurance benefits due to a vague indication that he had blood pressure problems, when he reasonably believed that he didn't.

What You Should Do

If your claim for a family member's life insurance has been denied, you should talk to an attorney, like those at Fleishman Law Office SC. Provide the attorney with as much information as you can about the policy, the circumstances around its purchase (such as who might have been with your relative when he or she took out the policy and been present for any questions), and the reason the insurance company is denying the claim.