The top 5 reasons to be denied a life insurance claim:
- Medical information is incorrect.
- Financial information is incorrect.
- Arrest records and criminal background were not disclosed.
- Use of alcohol or drugs was not disclosed.
- The policy lapsed before the person died.
These are the top 5 reasons a life insurance claim can be denied. Was your life insurance claim denied? We can get it paid quickly.
Life Insurance Claim Investigations
When a Contestable life insurance claim is submitted to an insurer the insurer will do an extensive investigation into the claim and may deny the claim. As protection to the beneficiary of the claim, each state has adopted protections and prohibitions that the insurer must follow in its investigation process.
Life insurance claims are investigated and settled based on the NAIC Unfair Claims Settlement Practices Act. Each State has adopted a version of this act and it is the basis for how a claim must be handled by the insurer. The idea behind this Act is to make the claims process fair for the life insurance policy beneficiary.
The purpose of the NAIC Unfair Claims Settlement Practices Act is to set forth standards for the investigation and disposition of claims arising under policies or certificates of insurance issued to residents of each US State. It’s not intended to cover claims involving worker’s compensation, fidelity, suretyship, or boiler and machinery insurance. It is intended to cover claims for life insurance benefits.
When an insurer repeats certain behavior, that behavior can be considered a standard business practice by the insurer. Standard business practices that are considered unfair to a beneficiary are prohibited.
Common unfair claims settlement practices
Your State has adopted a version of the NAIC Act. Within the Act there are protections which say that knowingly committing or performing, with such frequency as to indicate a general business practice, any of the following unfair claims settlement practices, are prohibited:
(1) Misrepresenting to claimants pertinent facts or insurance policy provisions relating to any coverages at issue.
(2) Failing to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies.
(3) Failing to adopt and implement reasonable standards for the prompt investigation and processing of claims arising under insurance policies.
(4) Failing to affirm or deny coverage of claims within a reasonable time after proof of loss requirements have been completed and submitted by the insured.
(5) Not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear.
(6) Compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by the insureds, when the insureds have made claims for amounts reasonably similar to the amounts ultimately recovered.
(7) Attempting to settle a claim by an insured for less than the amount to which a reasonable person would have believed he or she was entitled by reference to written or printed advertising material accompanying or made part of an application.
(8) Attempting to settle claims on the basis of an application that was altered without notice to, or knowledge or consent of, the insured, his or her representative, agent, or broker.
(9) Failing, after payment of a claim, to inform insureds or beneficiaries, upon request by them, of the coverage under which payment has been made.
(10) Making known to insureds or claimants a practice of the insurer of appealing from arbitration awards in favor of insureds or claimants for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration.
(11) Delaying the investigation or payment of claims by requiring an insured, claimant, or the physician of either, to submit a preliminary claim report, and then requiring the subsequent submission of formal proof of loss forms, both of which submissions contain substantially the same information.
(12) Failing to settle claims promptly, where liability has become apparent, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage.
(13) Failing to provide promptly a reasonable explanation of the basis relied on in the insurance policy, in relation to the facts or applicable law, for the denial of a claim or for the offer of a compromise settlement.
(14) Directly advising a claimant not to obtain the services of an attorney.
(15) Misleading a claimant as to the applicable statute of limitations.
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