Can a Life Insurance Company Refuse to Pay a Claim?
Life insurance companies need specific evidence that supports a legal justification to not pay a claim. Even if a life insurance company is suspicious of a claim, it must pay. Even if the life insurance company lacks some of the information that the company has asked for, it must pay. A hunch or mistrust is not enough of a reason to justify not paying a claim. If a life insurance refuses to pay a claim, a life insurance lawyer can sometimes force the insurance company to make a different decision, to pay.
If a claim takes too long, to our clients that is the same as a claim denied. A claim delayed is a claim denied, we always say. If the life insurance company just doesn’t want to pay the claim–but knows it doesn’t really have enough evidence to deny the claim–the investigation may just drag on and on. Usually, the life insurance company will keep asking for information, and at some point, most people will either need to do too much work to get the information. Or maybe they just don’t know how to get the information requested, and they think without it, the claim is done. The life insurance company will say, “oh, they never provided the information requested, so we did not pay” even though what really happened is that the person got worn out. We are here to help, because we will help get the necessary information. We won’t let your claim be delayed as way of never paying the claim.
Another way life insurance companies refuse to pay a claim is to investigate for too long. The life insurance company will say that they are “seeking medical records” and just never seem to get those records. So they don’t complete the claim, and they don’t pay. Or the life insurance company asks for other information, like the names of witnesses, or documents that you just don’t have. The response to the request for information is not received, and the life insurance company doesn’t pay. Just like a denial, but without a denial.
A life insurance policy is a special kind of contract–where the life insurance company is really trusted to do its part of the bargain. Especially because a life insurance policy pays after the person has passed away, law supports the payment of a life insurance claim. There is even a public interest in claims being paid. If a life insurance company chooses to deny a claim, it needs a strong explanation of why. That explanation needs to justify the life insurance company breaching the contract.
Sometimes, the life insurance company tries to refund the premiums, and pretend the policy was never even purchased. That is called rescission, or to rescind, the life insurance policy. Rescission requires strong evidence of a misrepresentation by the insured, on the application. People are surprised when they get a check from the life insurance company for much less than the benefits.