Reasons Life Insurance Will Not Pay
When you buy a life insurance policy, you do so with the intention of providing for your family after you are no longer around to do so. In some cases, the fact that you bought a life insurance policy does not necessarily guarantee that your loved ones will be taken care of. Life insurance companies have been known to deny coverage, even after an insured passes away.
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Partial Disclosure
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A primary reason a claim denial occurs is because a person does not disclose important information on her life insurance application. Most of the time, life insurance companies require a person to complete a medical questionnaire and to go through a medical exam. If the policyholder did not disclose an important medical condition that showed up in the exam, the claim could be denied for this reason. If you want to ensure that your policy pays out, disclose everything and complete the application.
Not Enough Time
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Another common reason that a life insurance company denies a claim is because there was not enough time between the date the policy was taken out and when the policyholder died. Most life insurance policies have a minimum amount of time that must pass before a person is covered. Some life insurance companies do not have a specific number of days or months that must pass, but they could still deny the claim if they feel like not enough time has lapsed.
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Questionable Death Circumstances
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If the insurance company believes that there are questionable circumstances surrounding the death of the policyholder, it may deny a payout. For example, if the insurance company thinks that the death could have been a suicide, it will not pay the claim. If the insurance company believes that the beneficiary might have murdered the policyholder to collect on the insurance claim, it will not pay. The insurance company will conduct an investigation into the death and make a decision accordingly.
Premiums
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If you want to ensure that your beneficiaries receive a payment when you die, keep your life insurance premiums paid up. Failing to pay causes the policy to lapse and the life insurance company to deny paying any benefits. Although there is generally a grace period before your policy lapses, the insurance company can decide not to pay benefits if you die and your premiums were not paid on time.
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