When you lose a loved one, fighting with an insurance company about the payment of life insurance benefits is probably one of the last things on your mind. All too often, though, life insurance benefits are denied on questionable bases. This post addresses three common reasons insurance companies deny life insurance claims, as well as the role of an experienced life insurance attorney in resolving these disputes.
1. The Insurance Company Claims the Decedent Never Elected Coverage
Perhaps surprisingly, on multiple occasions our firm has encountered 
insurance companies who deny life insurance benefits on the basis that the decedent never had a policy in the first place. The insurance company may claim a policy does not exist, paperwork is missing or a premium was not paid. Whether intentional or an innocent error in the insurance company’s administrative claims handling process, such a position can prove quite frustrating for the beneficiary.
How a lawyer can help: A life insurance attorney can track down the paperwork and get to the bottom of the insurer’s position that the decedent did not have coverage. If the policy was acquired through the decedent’s employer, the attorney can work with both you and the employer to obtain the documents necessary to prove coverage exists.
2. The Insurance Company Claims the Decedent Made a Misrepresentation in the Initial Application for Life Insurance
An insurance carrier may claim a life insurance policy is void because the decedent made a misstatement when he/she initially applied for insurance coverage. For instance, the insurance carrier could claim the decedent lied about their medical history. The insurance company may even offer to pay the premiums back to the beneficiaries but deny paying the life insurance benefits on the basis that the policy is null and void.
How a lawyer can help: A life insurance attorney can determine whether the insurance company has provided a legal justification for voiding the policy. For instance, Wisconsin law precludes the insurance company from contesting the validity of a life insurance policy after the policy been in force for 2 years. There are exceptions to this general rule, however, and the rule is further complicated by federal ERISA law, which preempts Wisconsin law for uninsured, employer-sponsored plans. Therefore, it is important to hire an experienced life insurance lawyer who knows the “ins and outs” of state and federal employee benefits law.
3. The Insurance Company Claims the Manner of Death is Excluded by the Policy
If the decedent had accidental death and dismemberment (AD&D) insurance coverage, the insurance company may deny paying benefits on the basis that the death was not accidental or that it was otherwise excluded by the policy. Accidents such as car accidents, drownings or falls should be covered by AD&D policies, but the insurance company may allege a disease of the body contributed to the accident, and therefore, the accident is not covered. Other common reasons for denial are that the decedent’s conduct was intentional or there were drugs and alcohol involved.
How a lawyer can help: A life insurance attorney will conduct an investigation and gather the evidence necessary to prove the cause of death. The attorney will hire investigators and experts to the extent they are needed to fill in the gaps missing from the existing medical records and other documents. The attorney will then piece together the evidence and argue your case, by way of a written appeal, to the insurance company.
The above list represents some common reasons for denials of life insurance benefits claims, but it is by no means exhaustive. Moreover, this post cannot possibly address the nuances of any particular case and is not intended to provide legal advice. If you have been denied life insurance or accidental death and dismemberment (AD&D) insurance benefits, contact Hawks Quindel to arrange a consultation with employee benefits attorney Danielle Schroder .
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