Life Insurance Benefits

When you need it most insurance companies may deny a claim.

Your life insurance policy is a contract between you and the insurer where you agree to pay a certain amount of money each period and in return, the insurance company promises to pay money to the beneficiary or beneficiaries named in your policy if you die.

The two most common types of life insurance are term policies and whole life policies. With a term policy, your policy stays in effect for a certain length of time depending on the term you choose as long as you continue to pay premiums. At the end of the term or if you stop paying premiums, your policy expires. With a whole life policy, you build value (equity) over time through your premium payments. If you stop paying premiums at some point, you will have a cash value built up that is yours to redeem by giving up the policy. Whole life is both a life insurance policy and a financial investment. Some whole life policies even pay dividends, which can be used as cash or reinvested to lower premiums and increase the value of your policy.

How are Life Insurance Claims Mishandled?

Not all life insurance claims are treated fairly. Insurance companies will sometimes go to great lengths to find a way to deny the claim. While there are many different tactics insurance companies use to avoid paying claims, some of the most common are:Lapse – If you fail to pay your premiums your policy may lapse, meaning it won’t be enforced and you lose coverage. As the beneficiary on a life insurance policy of a spouse or parent who has died, your first notification that the policy lapsed can come when you make the claim for death benefits. They may claim payment was never received, it was not paid on time, or there may be a dispute over the amount needed to keep a policy in force. You may know you paid, but proving the facts of an alleged lapsed payment can be difficult, especially if the deceased insured was responsible for the family’s finances.

● Rescission – Rescission is another term for cancellation. insurance companies can simply cancel or rescind the policy altogether. They’ll go back to the original application and scour it and then claim the insured lied on the application or failed to complete a section, so they don’t have to pay. When should the insurance company review a life insurance application for completeness and accuracy: when the person is applying for insurance or when the beneficiary is making a claim, after accepting premium payments month after month, year after year? 

● Delay – Another example of bad faith insurance is when insurers cause an unreasonable delay in paying benefits. One common tactic is to submit requests for information from you before they decide These requests may involve information you do not have, or they may simply be requesting information for the sole purpose of denying your claim.

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