Having a life insurance claim denied can be devastating. Not only do life insurance proceeds typically consist of large amounts of money, but these sums of money were often put into place to cover a beneficiary for life’s significant expenses over extended periods. On top of it all, a life insurance claim denial will often come at the worst of times, when a beneficiary is still grieving the loss of the policyholder.
What Are Some Reasons for a Life Insurance Claim Denial?
Typically, a life insurance denial comes in the form of a “denial letter” from a life insurance company after the beneficiary has already submitted the application for life insurance proceeds. In this life insurance denial letter, the life insurance company will usually identify and list the reasons why the death benefits are being denied. The life insurance company will also typically include a refund check, which should amount to the total premiums paid into the deceased policyholder’s policy. (Note: do not deposit this refund check!)
Unfortunately, all insurance companies – including life insurance companies – are in the business of making a profit, and that means denying claims. Typical reasons that a life insurance company will deny a claim include the following:
- The policyholder made a material misrepresentation (in other words, lied about something important) on his or her life insurance application and then passed away during the 2-year contestability period.
- The policyholder failed to pay his or her premiums in full and on time.
- The policyholder died due to suicide.
- The policyholder died while he or she was committing a crime.
- The beneficiary murdered the policyholder.
- The beneficiary did not correctly complete the application for death benefits.
- The beneficiary is a minor.
By far, of all those listed above, the most common reason that a life insurance company will deny a claim is that the life insurance company alleges that a policyholder made a material misrepresentation in his or her life insurance application and then passed away during the 2-year contestability period.
What Can I Do if My Life Insurance Claim Is Denied?
Generally speaking, when a beneficiary receives a denial letter for life insurance, the beneficiary has the following options for actions he or she can take:
- Notify the Louisiana Department of Insurance (LDI)
- Contact the insurance company for more information
- Appeal or dispute the claim on your own
- Hire an experienced life insurance denial attorney
Though it is both easy and free to contact the Louisiana Department of Insurance (LDI) about a life insurance claim denial, it is extremely unlikely that this will actually result in overturning the insurance company’s denial and getting a death benefits claim paid. This is because the LDI does not represent a beneficiary but is instead a resource for a beneficiary to understand the denial. The LDI may investigate the claim for wrongdoing by the life insurance company, but even if it found the insurer to be in the wrong, it would only take administrative action. It would not actually recover the death benefits for the beneficiary.
A beneficiary in receipt of a denial letter can also try to contact the insurance company for more information or appeal or dispute the claim on his or her own. Again, the problem with these types of actions is that they are very unlikely to actually result in getting the death benefits claim paid. It is tremendously rare that a life insurance company will end up paying a claim that it initially denied without an attorney involved. First, asking the insurance company to provide more information or explain its actions is simply asking the wrong person for help; remember, the insurance company is there to deny the claim. That is the job of its representative, no matter what the representative says or how polite the representative is. Second, disputing a claim or appealing a claim with the life insurance company itself is an exercise in futility because the beneficiary is essentially asking the insurance company (who does not want to pay) if they were correct when they previously said that the claim should not be paid.
Last, when a beneficiary receives a denial letter for life insurance, the beneficiary can hire an attorney. Though the beneficiary should take the time to find the right attorney, this will be the best and perhaps the only way for a life insurance beneficiary to actually receive the death benefits following a claim denial.
What Should I Do If My Life Insurance Claim is Denied?
Unfortunately, if a beneficiary is denied his or her life insurance claim, the best move for this beneficiary is to promptly hire a qualified, experienced life insurance attorney. In fact, as soon as a beneficiary receives a denial letter from a life insurance company, the beneficiary should contact an attorney. At that point, the beneficiary can pivot from asking the insurance company to pay to demand that it pay or face the consequences. And the consequences in Louisiana include penalties and attorney’s fees assessed against the insurance company if it denies a claim unfairly or fails to make an effort to settle any claims within a reasonable timeframe.
The goal of a life insurance beneficiary who has received a denial letter should be to get paid the benefits as soon as possible. Typically, the only way this will happen is if the beneficiary hires a lawyer and, more often than not, takes the insurance company to court. Also, in almost all cases, an attorney will take a life insurance claim on a contingency basis, which means that any attorney’s fee would only be taken out of a final settlement or verdict; thus, if the beneficiary did not receive any money, then he or she would not owe any attorney’s fees whatsoever. Plus, having an attorney handle the dispute will relieve the beneficiary of the burdens – mental, emotional, and financial – of having to fight with the insurance company.
If an Insurance Company Denies Your Life Insurance Claim, New Orleans Legal Can Help
If you have been denied your life insurance claim, please consider visiting with experienced New Orleans life insurance attorney Peter Diiorio at New Orleans Legal, LLC. Mr. Diiorio is committed to assisting you in any way possible, including fighting for your rights aggressively and achieving the maximum amount recoverable. Contact Peter Diiorio at New Orleans Legal for a free consultation and receive answers to your questions and concerns regarding a life insurance claim denial at (504) 897-5580.