Mistakes That Can Guarantee Life Insurance Claim Rejection
Life insurance is designed to keep a family financially safe from sudden and unexpected events such as the death of a family member. In case the provider of the family dies, their life insurance policy is supposed to provide a cushion to protect the family members.
However, there are some instances when a claim for a life insurance policy can be denied. These claims may be rejected by the life insurance company (even if you are the legitimate family of the policyholder) based on different grounds. Here is a list of these specific grounds that may affect the claim for the life insurance benefits.
Errors that may lead to the rejection of life insurance claims
The concealment of information
When a claim is filed for life insurance, the company then begins to scrutinize the information that is listed in the insurance claim. At the time of filing, the policyholder should have specified information about health, finances and other particulars.
If there is any discrepancy with the information listed in the policy that does not coincide with the cause of death, there is a chance that the claim for life insurance will be denied. For example, if the cause of death was because of a pre-existing illness that the policyholder did not mention in their initial application.
Misinterpretation of information
Even if the policyholder initially did not intend to conceal any information, the claim may still be denied if the policyholder did not understand what was being asked and answered wrongly.
For example, if the question on the form asked the policyholder if they were an alcoholic, and they answered yes, but in truth, they only drink during special occasions, this may affect the insurance claim in the future.
When the agent fills out the form
It is not a good idea for the agent to be the one to fill out the form on behalf of the policyholder. There is information on the form that requires exact measurements. Simple information such as height and weight, if filled out in error, can cause the claim to get refused.
A lapsed policy
In some instances, the policyholder may think that the policy is active, but they may not be aware that the policy has lapsed. This may happen if the policyholder missed a payment in the past, and failed to tell them that the policy has lapsed.
Details about the beneficiaries
If anything is lacking in the personal information of the nominees or beneficiaries, it may delay the claim from being paid out or it could invalidate the claim altogether. The spelling of the names and the completeness of the names matters when it comes to insurance claims.
The takeaway
This is why from the moment a person even thinks about investing in a life insurance policy, they should be very careful about the information that they put down in the application form. Even the smallest discrepancy can cause the insurance claim to be denied. This will mean that all the money that was invested into the policy over the years may have gone to waste because of negligence to check and make sure that all the information on the form is true and correct.
Always make sure to do the filling out of the form yourself. Do not rush through the form, because if you overlook something, it may mean the forfeiture of the policy’s proceeds. Many people are not able to claim the benefits that their loved ones left behind for them. To make sure that your family does not suffer the same fate, make sure you answer the form accurately, truthfully and if you have any questions or are unsure about how to answer some of the questions, ask your agent.
