Just because you sign up for life insurance in McKinney, TX, doesn’t mean it will automatically pay out benefits to your beneficiaries upon your death. You need to carefully review your plan with your insurer before committing to it since life insurance can be very complicated. Usually, life insurance policies are very specific and only cover what’s stated in print.
Several requirements must be met for a life insurance claim to be approved for payouts to survivors. If no beneficiaries are named in the policy, the insurer must pay benefits according to policy terms and the state’s laws where the policy was signed.
Policyholders must keep up with premium payments to keep their plans active, as missed payments can lead to claim denials.
The following are the five common reasons for denial of life insurance claims.
Lies on Insurance Application
It’s crucial to be honest while applying for life insurance, as lying will result in complications down the line. When you get caught lying, your insurer may notify the Medical Information Bureau (MIB) to enter your name and investigation details in its database, where other insurers will be able to access the information.
Some of the common lies on life insurance applications involve age, weight, medical history, drug use, and mental health. However, even misinformation other than health facts can also get your application denied. Usually, errors involving minor details based on guesswork aren’t treated as blatant lies. However, if the policyholder hides an addiction to illegal drugs, the insurer can deny the claim. The same is true if the policyholder tries to hide a disease like HIV/AIDS, cancer, diabetes, or heart disease. Even a common health condition such as depression must be reported as soon as you are diagnosed with it.
Most insurers will refuse to pay out a life insurance claim once they determine the cause of death to be suicide. If there is no definitive evidence regarding the cause of death, beneficiaries will need an attorney who specializes in such cases. Another debatable case is murder disguised as suicide, but such cases are usually too unclear to substantiate. The same can be true about accidental deaths such as overdosing on sleeping pills.
A life insurance policy typically has a clause and contestability provision for a specific period, usually two years after enrollment. Meanwhile, the suicide clause allows the insurer to investigate the death during this period. If the insurer concludes the policyholder committed suicide during the first few years, the claim will likely be denied. However, once this period has expired, the policy will cover suicide if it clearly states so.
Death in Combat
Dying in combat is often the result of signing up for a high-risk position in the military. Insurance companies either avoid extreme high-risk scenarios or charge expensive rates to cover them. Soldiers who perform active duty are by definition taking high risks that can result in accidental death.
Combat troops who cannot afford expensive life insurance can buy a cheap life insurance policy for minimal coverage. Nonetheless, the plan probably doesn’t pay benefits for death caused during training accidents. In fact, if the cause of death was not listed in the plan, it may not be covered at all. War death exclusion for civilians killed during wartime can also lead to claim denial.
Living Abroad or Traveling
Low-cost term-life plans typically do not provide much coverage for travelers. Insurers divide the world into risk zones based on issues such as crime, climate, economics, and other risk factors. For example, if the policyholder moves to a third-world nation where medical help is scarce, it can reduce the amount of payout.
Lifestyle activities such as engaging in dangerous sports can increase the risks of accidents. The more the policyholder gets involved in risky activities regardless of geography, the more limited the coverage will be. Getting killed in a skiing accident, for example, likely won’t be covered by a standard term-life policy. It’s possible to buy additional coverage for such risks, but it probably won’t be cheap. If it turns out that the policyholder tried to hide a risky pastime that led to their death, the policy will most likely not cover it.
If you die while working or traveling abroad, there can be issues involving paperwork with foreign governments that block the payment of life insurance benefits. Getting access to the death certificate or autopsy report can stifle the claim review process. Complications may also arise based on the foreign nation’s laws.
In Mexico, for example, a coroner is not required to view the body, based on an old Spanish law. This law considers taking pictures of a naked corpse as disrespectful to the dead. The coroner can issue a death certificate simply by reviewing medical paperwork if there’s no sign of foul play or medical malpractice. This situation can lead to a stack of paperwork that complicates and delays the insurance claim process. The paperwork may involve a translation of the original death certificate.
Even though the best time to get life insurance in McKinney, TX is when you’re young, you can still enroll in your senior years. The best benefits come from long-term plans, whereas the lowest rates can be availed through short-term options. Contact us at Gant Insurance Agency to learn more about life insurance in McKinney, TX. We’ll assist you in getting the right life insurance plan for you and your family.