In what circumstances can a life insurance policy claim be denied?
It rarely ever happens that a life insurance policy claim is denied. However, if that does happen, you should obviously contact your insurance broker and discuss the situation with him or her. You will sometimes have to contact an insurance commissioner. The only reason why an insurance company would ever not pay a claim is if they thought there was some foul play involved, or, if there was a significant fraudulent statement made on the application. One of the nice things about life insurance policies is that, after two years, the policies are completely incontestable. Even if a person was fraudulent on the application, on life insurance, the insurance company has to pay and even on a suicide, the insurance company has to pay the claim. Within two years, however, if there is fraud, the insurance company could deny benefits. For example, let's say that you were in Mexico and you had a heart attack and you had treatment in Mexico City. You came back to the United States, bought an American Life Insurance Policy, and did not tell the agent or the insurance company that you had anything wrong with your heart, and they issued the policy because they didn't know about your doctors in Mexico. If you died in the next two years, the insurance company could use that information and deny the entire claim and they would pay your beneficiary the premium that you have paid in plus interest which is completely normal and completely ethical for an insurance company considering you've defrauded them. On the other hand, if you've kept the policy for two years or longer, and they happen to find out this information of fraud, they would still have to pay the claim. The reason why they do this also, is that many times you could forget to mention something. For example, let's say you had childhood asthma and you forgot to mention that during your physical exam. You could wonder for the rest of your life whether or not the insurance company going to use this against you and not pay the claim. To sell insurance, to market it to the community and make sure people are not worried about that, they say two years is all we can do. We can deny the claim the first two years, thereafter, we can't do anything. Another thing that could happen is, you and your spouse have an argument and you say "I could kill myself for ever marrying you". You go into a car and you get into a car accident. If your best friend overheard you say you could kill yourself for ever getting married then you wouldn't want an insurance company to use that comment, that you meant in jest, as a reason for you to be denied a claim. So the insurance companies again say, after two years, there's nothing they can do to not have to pay that claim.
