Filing for life insurance proceeds can be a difficult process to go through, especially while grieving the recent loss of a loved one. Delays in paying out the life insurance policy can make this trying time even more challenging. Though in some circumstances, the life insurance companies will promptly pay out a life insurance claim within a week or two of the life insurance company’s receipt of the deceased’s death certificate, in many other cases the claim settlement process will be delayed by weeks or months or longer. Of course, a delay in a life insurance claim payout is not the same as an outright denial but can be just as stressful and upsetting.
Sadly, many life insurance companies prioritize their own profits over the well-being of their beneficiaries and policyholders. In fact, a chief tactic that life insurance companies use to prevent paying out death benefits is to delay payment on the payouts until the beneficiary gets so frustrated that he or she gives up. The life insurance companies will play games with beneficiaries, like requesting the same information over and over again, or requesting never-ending medical records even though the life insurance company is likely already permitted to obtain the deceased’s medical records. So, what are the reasons for these delays, and what can a beneficiary do about them?
What are Common Reasons Life Insurance Companies Delay Claims?
Life insurance companies delay life insurance payouts for many reasons, but the most common reason is that they are scouring a policyholder’s records for anything they can claim as a material misrepresentation and use to deny the claim. Usually, that means searching as many medical records as possible for any minor detail that was not disclosed by the policyholder so that the life insurance company can claim the policyholder lied on his or her life insurance application. So in that sense, the life insurance companies are incentivized to delay a payout.
Life insurance companies also delay claims in order to locate some type of exclusion that will allow them to deny the claim. Typical exclusion denials include exclusions because:
- The policyholder died due to suicide or self-inflicted injury.
- The policyholder died while he or she was committing a crime.
- The policyholder was murdered by the beneficiary.
- The policyholder was a felon.
Life insurance companies also delay claims by asserting that the beneficiary is not the right person to receive the proceeds; such issues could include beneficiary identification, underage beneficiaries, legal trust issues, and divorce and community property issues.
A list of the most typical reasons that life insurance companies delay claims includes:
- Contestable period deaths
- Policy exclusions
- Beneficiary identification issues
- Beneficiary listing not updated
- Insurance company backlog
- Discovery of additional policies
- Errors of the application for a claim payout
Lastly, one of the most common but avoidable reasons for the delay of a life insurance payout is that the beneficiary made one or more mistakes while filling out the application for death benefits. Errors in personal information, date of birth, income, occupation, qualification, and other information in the application can also cause delays in a beneficiary receiving his or her life insurance benefits.
How to Avoid Delays in Receiving Life Insurance Proceeds
Certainly, the most important step in avoiding any delays in a life insurance claim is for the beneficiary to avoid making any errors or mistakes on the application for death benefits. A beneficiary should fill out the application carefully and double and triple-check before submitting it. Also, remembering to include all the pertinent and essential information requested by the life insurance company, such as the original death certificate (and not a copy), the completed claim form, and possibly the original life insurance policy or policy number.
Another way to minimize any delays in a life insurance claim is to promptly notify the life insurance company about the policyholder’s death. This can be very challenging, considering that the grieving beneficiary has just lost a loved one and is typically handling other planning and affairs such as funeral arrangements. A beneficiary can either contact the life insurance company directly (most have a 1-800 number available online) or contact the life insurance agent directly.
Ideally, a beneficiary could contact both the life insurance company and the life insurance agent directly. If the beneficiary just contacts the life insurance agent, the beneficiary will still need to complete the same forms and meet the same requirements as if the beneficiary contacted the life insurance company directly. Once the beneficiary gets in touch with the life insurance company, the insurance company will send the beneficiary the claim form directly, advise the beneficiary of all the requirements for the application for death benefits, and generally walk through the full life insurance claims process.
What Do I Do if My Life Insurance Claim is Delayed?
If a beneficiary is experiencing a long delay with the life insurance company, the beneficiary essentially has three choices:
- Continue to wait for the life insurance company;
- Contact the life insurance company; or
- Contact an experienced life insurance attorney.
Once the beneficiary has decided to stop waiting for the life insurance company, the beneficiary should decide if he or she understands the reason for the delay. If the beneficiary does not understand the reason for the delay, the beneficiary should contact the life insurance company and demand to know the reason for the delay. If a life insurance company is delaying a decision on a death benefits claim, the beneficiary has the right to know why the claim is being delayed. Preferably the life insurance company should inform the beneficiary of the reason for the delay in writing.
If the beneficiary does understand the reason for the delay but suspects the reasons may not be valid, then the beneficiary should strongly consider contacting an experienced life insurance attorney. Once a life insurance attorney is handling the claim, the life insurance company will stop delaying the claim by sending never-ending, redundant document requests because the life insurance company knows that if the claim is not resolved quickly and fairly, the life insurance attorney will file a lawsuit against the life insurance company. Additionally, some attorneys offer free no-obligation consultations regarding life insurance claims and will be able to give some free advice on what is happening with a claim.
New Orleans Legal Can End the Delays in Your Life Insurance Claim Proceeds
At New Orleans Legal, we understand how important life insurance can be for surviving family members after the passing of a loved one. This family member paid premiums for the peace of mind to know that this family would be taken care of. If your life insurance claim has been denied, please call attorney Peter Diiorio at New Orleans Legal, LLC, to end the delays in receiving your life insurance proceeds. Mr. Diiorio can discuss your claim with you at no cost and let you know when you are being treated fairly and when delays are unjustified.
Mr. Diiorio of New Orleans Legal, LLC is an experienced Louisiana life insurance claim attorney representing insureds and beneficiaries in life insurance claim disputes against life insurance companies. If you find your life insurance claim delayed, Mr. Diiorio is happy to handle your case on a contingent fee basis, which means that all legal fees are taken at the end only if there is a recovery of life insurance proceeds for you. Please contact us now at (504) 897-5580 to schedule a free face-to-face, Zoom, or telephone consultation, and let us handle the life insurance company for you.