Your loved one carried life insurance so you would be provided for upon their death. You may have even counted on this benefit to see you and your family through these difficult times. However, the claim was denied, and you don’t know what to do. If the life insurance policy was provided by your loved one’s employer, you might be able to file an appeal under the federal Employee Retirement Income Security Act (ERISA), and an ERISA attorney can help.
Understanding Why the Claim Was Denied
Insurance companies are never enthusiastic about paying out on claims, including life insurance claims, and will look for any reason to deny you. Often, the denial comes down to a technicality or a clause in the policy you weren't aware of. Sometimes, these denials are wrongly issued, and you can file an appeal.
In general, most life insurance claims are denied for one of the following reasons:
- Non-payment of policy premiums. If your loved one had stopped paying on the policy or missed a payment or two over the course of the policy, it'll be considered to have lapsed, and the carrier will deny the claim. The amount your loved one paid in premiums over the years won't matter. If you can prove that payments weren't missed, you might be able to appeal the denial. An exception to this strict provision is a whole life insurance policy with a cash value.
- Uncovered cause of death. Life insurance policies may exclude certain causes of death from coverage. If the carrier determines that your loved one’s cause of death wasn't covered, your claim will be denied. Examples of causes of death that may be excluded are suicide, combat, and dangerous activities such as skydiving or mountain climbing. Many life insurance policies don't exclude certain causes of death, so it's important to understand the terms of the policy at the time of purchase.
- Failure to disclose information. If the insurance adjuster decides that the policyholder failed to reveal important information that would have changed the initial assessment of risk, he could deny the claim. For example, failing to disclose a medical condition or DUI conviction, or misrepresenting facts on the application could be grounds for denial of coverage. Generally, this only applies during the period of contestability.
- The contestability period wasn't over. Life insurance policies have contestability periods of two years from the date the policy was purchased. If the insured dies during that two-year period, the adjuster can investigate whether the information you provided on the application was complete and accurate and contest payment on the claim. If the insured dies after the two-year period is over, the claim usually isn't contested.
If your claim is denied, the adjuster should provide a reason.
ERISA Protects Your Right to Appeal
Benefits provided by a private employer, including life insurance coverage and long-term disability, are regulated by ERISA. Whether the insurance is provided as a benefit at no cost to the employee or is offered for optional purchase, it's subject to ERISA regulations. If your claim is denied, you must first file an appeal in writing.
If the appeal is denied, you can then:
- File a lawsuit in federal court
- Sue an insurance company for breach of fiduciary duty
- Present new evidence during the appeal
ERISA also places limitations on what you can do if your claim is denied. As a policyholder or beneficiary, you may not:
- Sue an insurance company for breach of contract or bad faith
- Admit new evidence in a trial against the insurance company if it was not introduced during the appeal
- Have a jury trial
- Be entitled to conduct any pre-trial discovery
The appeal and lawsuit processes for ERISA claims are complicated. It's important that you get reliable guidance throughout the process from an attorney who's experienced with ERISA claims.
Contact Monast Law Office With Your Questions
I'm dedicated to helping clients denied an employee benefit covered by ERISA, including life insurance. Contact our office in Columbus to discover how we can help. To learn more about ERISA and the appeals process, request a free download of our book, Don’t Go It Alone: How Insurance Companies Sabotage Disability Claims.
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