You buy life insurance to ensure your loved ones are financially secure even after your demise. The death benefit is the sum of money your insurance provider gives the beneficiary, as specified in your policy. However, there are instances when the beneficiary’s life insurance claim may be denied.
This blog discusses four scenarios that may lead to the life insurance claim being denied. It is to make you aware of the reasons and take measures to prevent such a thing from happening to your beneficiary.
Policy Holder’s Death Within the Contestability Period
The life insurance policy you buy has a contestability period that usually extends for two years from the date of purchase of the policy. If your death occurs within this period, your insurance provider may investigate whether the cause of your death is due to a health-related detail you had missed mentioning while buying the policy. If they find any untruths in your application, they may deny your life insurance claim even if your death may not be linked to your provided information.
Also, with frequent incidents of the beneficiary killing the policyholder to amass the death benefit, your insurer may probe your death. If their investigation proves the mala fide intentions of the beneficiary, the life insurance claim may be denied.
Death by suicide within the contestability period may also result in denying the life insurance claim.
Common Causes of Death Exclusions in Standard Life Insurance Policy
Certain causes of death are exclusively excluded from life insurance policies. They are:
- Death of the policyholder while participating in criminal activity
- Death of the insured due to illegal activity such as speeding or DUI, or drug overdose
- Risky hobbies such as bungee jumping, scuba diving, or flying as an amateur pilot
- Acts of war and terrorism
- Aviation accidents
Failure to Furnish Correct Personal Information
Your beneficiary’s life insurance claim may be denied if your insurance provider finds that you have withheld important information while filling up your details in the application form. While inaccuracies in your contact details and residential address may be considered errors, other inaccuracies related to your medical history or driving record, if proven by your insurer, may hurt the claim process of your policy by your beneficiary.
This is so because, based on your details, your insurer initiates the underwriting process that helps them decide whether to offer or deny you coverage and estimate your life insurance premium rates.
Failure to Pay Premiums Regularly
For whole life insurance policies, you must pay premiums regularly till your death for your beneficiary to access the policy death benefit. However, if there is a lapse in your payment of premiums, your policy may be canceled, or the death benefit claim denied. You may avoid it by:
- Automatic deduction of premiums from your account
- Borrowing from your cash value savings
Secure Your Loved Ones with J. Archer Insurance
Our team at J. Archer Insurance Group can help you buy the right life insurance policy based on your unique requirements and also ensure that you take all steps needed for assured passage of the death benefit to your beneficiary. Contact us today for our insurance quotes.
