Life insurance is meant to provide financial security and peace of mind for you, and your family, should the worst happen. Unfortunately, not all health insurance claims are paid out (or partially paid out) which can be incredibly stressful for those facing an uncertain future following the loss of a loved one. It’s therefore essential to understand the most common reasons life insurance claims are rejected to ensure that you and your loved ones are adequately protected.
Misrepresentation or non-disclosure
When taking out a life insurance policy you are required to disclose your medical history as well as any health and lifestyle habits. If you fail to disclose critical details or provide false information, then it can lead to a future life insurance claim being denied. Even unintentional omissions can cause complications or delays during the claims process so you should always give a thorough account of your health and lifestyle at the time of applying.
Non-payment of insurance premiums
It’s important not to let your policy lapse. If you’ve failed to keep up with your payments, then this can result in a future life insurance claim being rejected. If the insurance premiums aren’t paid within the timeframe specified in the policy, it might become inactive, rendering the policy invalid. So, if you’re experiencing financial difficulties, then check your policy so you know what the grace period is.
Cause of death exclusions
Some policies contain exclusions that invalidate life insurance in certain circumstances. For instance, if you die due to activities excluded in the policy, such as extreme sports, then the insurance claim might be rejected. It’s therefore important that both you and any beneficiaries understand the policy and any exclusions contained within it.
Clause relating to suicide
Most policies have a suicide clause stating that if you take your life within a specific period after the policy was taken out then the claim might be denied. These clauses normally relate to the first one or two years after the policy has commenced.
Death during the contestability period
If you die during the contestability period, usually within the first couple of years of taking out the policy, insurers have the right to investigate and deny claims based on inaccuracies or non-disclosures made during the application process. This period acts as a safeguard for insurance companies to verify the accuracy of the information provided by the policyholder.
Fraud or dishonesty
If there’s evidence of fraud or misrepresentation that could impact the terms of the policy, the insurer can contest the claim or cancel the policy entirely. Any suspicion or evidence of fraudulent activity, such as faking illness or death, as well as tampering with documents, can lead to a claim being rejected.
CEL Solicitors’ top tips to prevent a life insurance claim being rejected:
Honesty is the best policy: always provide accurate and complete information during the life insurance application process to prevent issues later.
Regularly review your policy: and update the insurance company about any changes in your health or lifestyle.
Check your policy terms: Make sure you understand and are aware of any policy inclusions, exclusions, and requirements.
Pay your insurance premiums on time: Ensure you make payments on time to avoid policy lapses.
Appealing a rejected life insurance claim
Insurers don’t always get it right so if your life insurance claim has been rejected then you can appeal this decision. At CEL Solicitors we help people whose insurance claim has been denied by their insurer. We offer free initial advice and work on a no-win, no-fee basis so there is nothing to pay upfront and nothing to lose by speaking to one of our friendly advisors today. Call 0808 273 0900 or complete an online form and a member of our team will be in touch as soon as possible.