Reasons Why Life Insurance Carriers Reject An Insurance Claim

Acquiring a life insurance policy should be a part of planning and securing your family's future

. When the wage earner of the household dies, life insurance supplies the lost inflow of income in the family and grants financial aid for their future needs. Nonetheless, there are conditions that could sway an insurance carrier to reject a claim for insurance benefits.

Canceled Policy

The life of a policy remains in effect provided that you unfailingly pay for the premiums of the insurance plan. If your policy has a cash value, the insurance company will increase those funds to keep up the life of the policy. Then again, if you have a life plan that does not hold any cash value and you fail to pay premiums, the policy will be revoked eventually. And if you die so untimely before you even restore your policy, the insurer will repulse any claims made by your recipients.

Invalid Policy

During the first two years period of your policy, the insurance company gets the right to rescind the contract if they make out that you have provided erroneous information on the application of the policy owner. If a policy owner dies prematurely during the contestability period, the insurance carrier may ask for the policy holder's medical records to investigate on the accuracy of the information supplied in the application form. The company can invalidate the policy if they realize that the insured did not reveal his pre-existing health condition. The secreted medical problem does not have to be the cause of the policyholder's demise.

Fraud

A company may rebuff a policy any time if it has proven that the policy owner did submit a fraudulent application. A very good example of application dishonesty is when an applicant deliberately covers up a serious illness. If the insured dies within the contestability period, the company will merely rescind the policy. If it happens after the first two years of the policy, the company will contest the claim for death benefits if it has been proven that the policy owner intentionally misinform the company during the application process.

Excluded Cause of Death

Many insurance companies take in suicide clause in the contract that may hinder the claim for death benefits. A death caused by suicide during the first two years of the policy can be a ground for rejection of insurance coverage. Conversely, some insurer nullifies an insurance coverage if the policy holder dies while performing an unlawful act.

by: Cindy McGrant

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