Steps to Take if Your Life Insurance Claim is Denied

Having a life insurance policy with adequate coverage is the best way to safeguard your family’s financial security in the event of the unexpected. 

The death benefit paid out to beneficiaries can help cover funeral costs, monthly expenses, and outstanding debts, and even fulfil long-term goals such as sending children to college. 

However, there can be instances when your life insurance claim can be denied – adding significant stress to an already emotional situation. 

If you have had your life insurance claim denied or are worried it might be – you have come to the right place. Let’s explore the key steps to take if your life insurance claim is denied to ensure you receive your rightful benefits.

5 Steps to Take if Your Life Insurance Claim is Denied

Step 1 – Review & Understand the Denial Letter

Why has your life insurance claim been denied? To find this information, carefully read and understand the denial letter from your insurance provider. 

This document will provide details and specific reasons why your claim was rejected. 

Common reasons for claim denial can include:

• Non-payment of premiums: If the policyholder fails to pay premiums, the policy may have lapsed.
• Misrepresentation: A claim can be denied If inaccurate information was provided during the application process, such as undisclosed health conditions or risky behaviours.
• Exclusions: Certain events, such as suicide or death during a hazardous activity, may be excluded from coverage.

By understanding the insurer’s reasoning, you can determine the best course of action for your appeal.

Step 2 – Gather Relevant Documentation

Once you understand the reason for the denial, you need to gather relevant documentation that supports your case and proves your claim was wrongly denied. 

Important materials to collect may include:

• Medical records: If the denial is related to health issues, obtaining all relevant medical documentation can help clarify any misunderstandings.
• Payment proofs: If non-payment of premiums is cited, provide bank records or receipts to prove that payments were made on time.
• Correspondence with the insurance company: Keep all communications with the insurer, including emails, letters, and phone call summaries, to track your interactions.

Organizing your documentation effectively will ensure you have a solid foundation for your appeal.

Step 3 – Consider Consulting with an Attorney

In some cases, appealing a denied claim may require legal intervention, especially in situations involving complex policy language or if you suspect the denial is unfair or in bad faith. 

A lawyer experienced in insurance law can help you navigate the appeal process and can also assist with negotiating settlements or escalating the issue to court if necessary – giving you a better chance of resolving the dispute in your favour.

Step 4 – Utilize Provincial Insurance Departments

In Canada, provincial insurance departments can play a critical role in helping you dispute a denied claim. These regulatory bodies oversee insurance practices and ensure insurance providers comply with the law. 

If you believe the denial was unjust, contacting your provincial insurance department may provide additional resources for your appeal.

They can offer guidance on your rights, investigate the insurance company’s actions, and help mediate disputes to strengthen your case.

Step 5 – Write an Effective Appeal Letter

The final step of the process requires crafting an appeal letter that persuades the insurance company to reconsider its decision. 

Key elements of a strong appeal letter include:

• A clear summary: Start with a brief overview of the claim and why you believe the denial was incorrect.
• Evidence: Attach supporting documents such as medical records, payment receipts, or policy interpretations.
• Polite but firm tone: Be respectful but assertive, making it clear that you expect a fair review of the claim.

Here is an example of how an effective appeal letter should read:

“I am writing to appeal the denial of my life insurance claim for Policy #12345. Upon reviewing the denial letter, I believe that the decision was made based on a misunderstanding of the facts regarding my late husband’s medical history. Please find attached his medical records, which demonstrate compliance with the policy’s terms.”

How To Deal with Policy Exclusions?

Most life insurance policies will contain exclusions. These exclusions are specific scenarios where coverage does not apply. 

Some common exclusions include:

• Suicide clause: Many policies will not pay out if the policyholder dies by suicide within the first two years of the policy being active.
• High-risk activities: Deaths resulting from risky activities, such as skydiving or scuba diving, may be excluded from coverage.

If your denial is based on an exclusion, understanding the exact terms of the policy is crucial. In some cases, exclusions can be misinterpreted, or there may be grounds to challenge the insurer’s application of the exclusion.

Consider Alternative Dispute Resolution

If the traditional appeal process does not yield results, consider pursuing alternative dispute resolution (ADR) methods such as mediation or arbitration. These processes can offer a faster, less adversarial route to resolving the dispute.

• Mediation: A neutral third party helps both sides negotiate a settlement.
• Arbitration: A more formal process where an arbitrator makes a binding decision after hearing both sides.

Initiating ADR typically involves contacting the insurance company to request mediation or arbitration and agreeing on a neutral third-party mediator or arbitrator. 

Many insurance contracts outline ADR options, so check the policy for these provisions.

How Can A Life Insurance Expert Help?

Dealing with a claim denial after a loved one’s death can be a stressful and tedious task. 

Having an attorney or a trusted insurance broker by your side can help you navigate claim denials more effectively by engaging and responding promptly to any requests from the insurance company and keeping a close eye on the insurer’s actions including any attempts to delay or counter your appeal. 

They can also ensure timely follow-ups and consistent communication to help move the process along and signal your commitment to resolving the issue as quickly as possible.

FAQs

Q) How can I gather the right documentation for my appeal?

You don’t need to send all the documentation again if your claim is denied. Understand the reason for the denial and only collect and send relevant documentation that helps prove your claim was wrongfully denied.

Q) When should I consider legal assistance for my denied claim?

Consider legal assistance if you don’t quite understand why the claim was denied, the claim involves large sums of money or has complex terminology or issues that require legal expertise.