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Why Do Insurance Companies Reject Life Insurance Claims?

Why Are ife Insurance Claims Rejected or Denied?

Are you worried about a life insurance claim being rejected? Life insurance is an investment into the future of those you love, but if your claim is denied it could prove disastrous. Why do insurance companies reject life insurance claims?

What Does Life Insurance Cover?

Life insurance products have been designed to ensure you and your loved ones are taken care of should you no longer be in a position to work, should you die, or become terminally ill. Life insurance also offers cover if the insured succumbs to cancer, gets HIV or diabetes or other illnesses, loses their job through retrenchment, or become disabled.

Where Can I Get Life Insurance?

Financial advisers are licensed according to a variety of qualifications and experience for the type of planning and insurance products they are permitted to sell you. Therefore, it is your right to select a brokerage or broker that you trust. Always ensure that your broker is adequately licensed and qualified to sell life insurance products.

Why do Insurance Companies Reject Life Insurance Claims?

1. Withholding information

Withholding information, even unintentionally, is perhaps one of the main reasons for claims being rejected or not paid out in full. That is why it is important that you give your insurance provider the correct information about your health and your lifestyle when taking out life cover.

This includes any illnesses or diagnoses that you have in the present or had in the past. A medical condition that is omitted and is not underwritten or taken into account when your premium is calculated could result in your claim not being paid out. Beware of non-disclosures when choosing life insurance products, including anything from the insured having cancer or diabetes to their participation in dangerous sports.

One of the most common reasons for withholding information is because it will affect the policy premiums. People believe by not disclosing the information, they will end up paying lower premiums. Beware, the insurer is smart and will find out soon enough about anything you have not disclosed. If the policyholder dies as a result of something they did not disclose, their beneficiaries could find they have been short-changed and the policy won’t be paid out.

2. Claims Submitted During Waiting Periods

If your policy is in a waiting period and a claim is submitted, it may be rejected. Some policies have shorter waiting periods than others. A waiting period is the time between when you start paying monthly premiums and when claims will begin to be accepted by the insurance provider. The waiting period will be clearly stated in your policy. Often there a 2 year waiting period before suicides are covered, if they aren’t excluded altogether. For natural deaths, the waiting period could be as short as 6 months.

3. The Family Member or Individual Claiming has an Undefined Relationship with the Policy Holder according to the Policy Document

The relationship of the individual claiming from the policy to the insured person should be made clear in their policy. This is often the case, except where the insured is caring for extended family members such as cousins, uncles, and others who may not be blood relatives or relatives by marriage. If the relationship isn’t clear, the claim could be rejected.

4. Th Event You’re Claiming for is Excluded or Not Covered

A great example of an exclusion is suicide or pre-existing conditions. Exclusions will be specifically detailed in your policy, so you can find out what is excluded before you sign. Not all insurance policies offer cover for dread diseases and disability claims. If a life event happens that isn’t included in your cover, your claim will b rejected. For this reason, it’s important to make sure all the risks you want to be insured for are included on your policy.

Sources: 1ife