Life insurance is a valuable tool for financial planning and providing peace of mind to individuals and their families. It is a contract between the policyholder and the insurer that pays a lump sum of money to the beneficiaries listed on the policy in the event of the policyholder’s death. While most life insurance claims are paid out without issue, some claims may be declined for various reasons. In this blog post, we will explore the common reasons why life insurance claims are declined.
Misrepresentation or non-disclosure
One of the most common reasons for a declined life insurance claim is misrepresentation or non-disclosure. When applying for life insurance, the policyholder is required to provide accurate and complete information about their health, lifestyle, and other relevant details. If the policyholder fails to disclose or misrepresents any material information, such as a pre-existing medical condition or a history of substance abuse, the insurer may deny the claim.
Suicide
Suicide is a complex and sensitive issue that affects many families. Most life insurance policies have a suicide clause that excludes cover for deaths resulting from suicide within a certain period of time, typically one or two years. If the policyholder dies by suicide within this period, the insurer may decline the claim
Exclusions
Life insurance policies may have specific exclusions that limit cover for certain types of deaths. For example, some policies may exclude cover for deaths resulting from high-risk activities such as skydiving or bungee jumping. If the policyholder dies as a result of an excluded activity, the insurer may deny the claim.
Lapsed policy
This has been our most common problem. If the policyholder fails to pay their premiums on time, their policy may lapse and the cover may be terminated. If the policyholder dies after the policy has lapsed, the insurer may decline the claim.
Homicide or criminal activity
If the policyholder dies as a result of criminal activity, such as murder or participating in a dangerous crime, the insurer may decline the claim. This exclusion applies even if the policyholder was not the one who committed the crime but was a participant.
In conclusion, life insurance claims may be declined for various reasons, including misrepresentation or non-disclosure, suicide, exclusions, lapsed policy and murder or criminal activity. To avoid having a claim denied, it is essential to provide accurate and complete information when applying for life insurance and to understand the policy’s terms and conditions.
Low Cost Life Cover is an independent broker with agencies with all the major insurners Zurich, Royal London Ireland, Irish Life, Aviva and New Ireland. It is our job to provide you with the best independent advice that is the most suitable for your needs. I would be happy to discuss your individual needs if you have any questions give me a call 01 6853818, I’m from Donegal I love to talk!
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