Life insurance covers are bought in order for people to make sure that their families continue to live the same lifestyle in case of disability or premature death. This makes it easier for the beneficiaries to cope especially in case of death of the bread winner. But even after doing this, it is not automatic that the policy holder or the beneficiaries will enjoy the benefits. This is because some of these claims are declined. There are different reasons as to why insurance companies may reject the claim, some of which are:
When applying for a life insurance cover, the policy holder should be careful to give all the necessary information as needed. They should fill all the forms, do all the required medical examinations, and disclose the results accordingly. Failure to do this and probably not disclose of a major health problem that may cause their disability or death, then they are not bound to enjoy the benefits of the policy since their claim can be rejected.
The life insurance companies usually have a period up to which they can start to pay out claims. This time varies; it can be three or six months depending on the company. But they will always inform the policyholder of this. If a policy holder dies before this time lapses, then no compensations are made. But there are insurance companies that do not indicate amount of time so depending on the time of death, they can determine that the death was too soon and hence, not make the payment.
Uncertain death circumstances
When death occurs, life insurance companies undertake a thorough investigation to determine the cause of death. This is especially done if they suspect foul play with the death of the policyholder. For instance, they may suspect that the beneficiary had a hand in the death of the policy holder. If they do more investigations and find it to be true, then the beneficiary cannot be paid. Suicide is the other reason that would reject a claim, especially if it happens soon after taking the policy. This is because the death is thought to be premeditated in order for one to leave their beneficiaries with a better life. However, some companies give a period of which they can pay out the claim, for example, after a policy has been in force for 5 years.
Payment of premiums
Premiums are meant to be paid consistently and on time. Policy holders should ensure that they pay all premiums accordingly to avoid their claims from being rejected. Irregular payment or total failure to pay the premiums will make the policy lapse hence cannot be paid out. However, the insurance companies usually have a grace period upon which the policy lapses. In case of financial difficulties, it is important for the policy holder to contact the insurer and know what provisions they have in order to continue with the policy. For instance, the premium may be reduced to the minimum.