Although death is inevitable, its impact can be minimized through proper planning. Purchasing a life insurance policy is an effective way to ensure your family’s financial future in case of a sudden demise. However, it is not uncommon for insurance companies to reject or delay insurance claims. Read why your life insurance claim could be rejected or delayed.
Failing to update or appoint a nominee
Most people buy insurance policies when young as a tax-saving strategy instead of a family’s financial security. They further name their parents as beneficiaries or fail to appoint one altogether. This is the person who receives all the benefits from an insurance cover. As they grow old, their salaries increase, they get married, or their parents die. If they do not appoint or update the beneficiary details, the insurance may delay the claim settlement or reject it. Ensure that your beneficiary details are up-to-date and seek correspondence with your insurance provider to prevent claim rejection or delay.
The beneficiary of your life insurance policy is a minor
If you list a minor child as your beneficiary, the insurance claim will be delayed as insurers cannot release proceeds to a minor without a guardian. If you decide to name a minor child as your beneficiary, consider hiring a Florida Life Insurance Attorney to help you file proper guardianship documents to expedite claim settlement in your absence.
Provision of false information
Most people often hide their smoking and drinking habits when filing an insurance claim to lower their insurance premiums. Others fail to input their correct age, height, and weight as it is time-consuming, while some will provide an inflated income to get more sum assured benefits.
While this may seem convenient when filing for an insurance application, concealing important information has severe repercussions for the beneficiaries or family members. Despite submitting all the necessary documentation to the insurer, the claim could be rejected. Save your family unnecessary financial strains and hardships by being honest and keen when filing the application form.
Exceptions
Insurance providers often provide conditions under which the insurance claim may be rejected. Some common exclusions most life insurance providers invoke as reasons for delaying or refusing to pay claims include death due to alcohol or drug abuse, suicide, homicide or illegal activities, or death under intoxication.
Read the policy document comprehensively to understand exceptions to ensure your family leads a hassle-free life post your demise. You could also protect your family by hiring a Florida Life Insurance Attorney to represent your beneficiaries once you pass on because most insurance providers often reject insurance claims by ruling deaths as suicide, especially when the cause is uncertain.
Death during the contestability period
Insurance providers include a contestability clause when selling insurance policies. The contestability clause allows the insurance company to conduct an in-depth investigation if the insured dies shortly after taking the policy. This helps insurers prevent fraud. The contestability period is often between the first two years after buying an insurance policy.
If death occurs within this period, the insurance may delay or reject the claim. To protect your family from any delays in case of your demise during the contestability period, ensure there is no misrepresentation of data to allow insurers to conduct an incident-free investigation.
Declining medical tests
Insurance is a risky business, so companies conduct a proper assessment to mitigate risks. Insurers will verify each medical detail provided by the applicant, especially in high-risk or high-age coverage cases. They will also conduct medical tests to get a clear idea of the risk.
If you decline to take these tests, you increase the chances of your life insurance claim getting rejected by your insurance provider, citing some pre-existing medical condition. When required, go for medical tests to spot any pre-existing diseases. This will allow your insurer to provide coverage for these conditions and reduce the chances of rejection during a claim.
Policy lapse
Your insurance policy remains active as long as you pay premiums on time. Insurance companies also provide a grace period, usually 30 days, if you cannot pay your premiums within the specified time frame for various reasons. However, if you fail to pay the premiums after the grace period, the insurance will lapse, leading to the rejection of the claim after your demise. Keep an eye on premium due dates and renew policies to avoid claim delays or refusal. If you change your residence, ensure that you inform your insurer to ascertain that you get reminder mails to your new address.
A delayed or rejected life insurance claim is one of the scariest things that could happen to your loved ones in the event of your demise. Familiarize yourself with the above mistakes and how to avoid them to allow your beneficiaries to have a hassle-free settlement process.
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