In “7 Reasons Why Your Insurance Claim Might Be Rejected (Part 1)”, we talked about a few common reasons why your insurance claim might be subjected to unreasonable denials. Now, we bring you 7 more reasons that will help you understand why your insurance agent might be turning you around.
The truth of the matter is that corrupt insurance carriers are always on the lookout for weak spots. They try to discover loopholes in the policy in order to manipulate you. This is why it is important to do your research before choosing an insurance carrier.
While we do admit that sometimes the insurance agent is not forthcoming but other times you might be at fault. After all, you are purchasing something that concerns life and death matters. Not reading the policy clearly is the most common reasons why an insurance claim is rejected.
Let’s have a look at some of the other reasons why insurance claims are rejected:
11. Geographical Limitations
When you buy a local life insurance policy, the benefits provided are limited to the town or city you live in. A local insurance policy is less expensive compared country or worldwide insurance. Let’s assume that you bought an insurance policy in Branford, Connecticut. During your vacations, you decided to plan a week stay in Oklahoma. While driving to one of the amusement parks, your car met with an accident. One of your family members including you succumbed to the injuries.
Now, since your insurance policy was bought in Connecticut, it’s possible that your family might not be able to claim it because your death occurred in Oklahoma. This is why it is important to find out the territorial limits of your insurance policy.
12. Death in Hostile Countries
Did you read the contract clear before signing it? What if you die in an accident and for some reason your family is denied the payout. We have discussed about a few unknown reasons why insurance claims are rejected such as geographical limitations, mysterious circumstances, suicides and HIV. Death in hostile countries is another.
You see, insurance carriers often mention a few countries that are not covered under the policy. If you bought an international insurance policy then do ask the agent about the hostile countries. These countries refer to places that are under attack or not in good standing with the country you are living in. The carrier has the right to deny payout if you die in a war zone.
War and Terrorism
As mentioned earlier, if you are visiting a country that is a war zone, your insurance policy will become invalid. Acts of terrorism are not covered under a life insurance policy. However, you can modify your policy and include this clause in it but the premium charged will be much higher. After the 9-11 attack, people realized how fragile every country can be to terrorism. So, if you are planning to buy an insurance policy, do find out if the carrier covers terrorist attacks.
13. Statute of Limitations – Delayed Insurance Claims
The insurance policy holder in your family died on 28th March 2019. You informed the insurance carrier a month later about the incident and now they are refusing to pay the money.
Is this right?
Yes, they have the legal right to do this! It is extremely important to tell the insurance carrier that the policy holder has died the very same day. It allows them to review your policy and gather the paperwork to find out if the premiums were fully paid or not. The carrier has the right to deny the claim, if they think something suspicious is going on. While a death certificate provides proof, they might conduct an investigation of their own to find out if what the beneficiary is claiming true or not. This brings us to our 10th reason:
14. Mysterious Circumstances
Remember the John Darwin case? He was a prison officer and a former British teacher who disappeared while canoeing in 2002. It was believed that Darwin had died in a freak accident, which no one was a witness to. His body was never found and the case was put to rest. His wife claimed post-death benefits and the life insurance policy that was in his name. She paid the mortgage off on her home and then started living a luxurious life.
It was in 2007, when Darwin surfaced in Panama and was spotted with his wife. Turns out, Darwin had faked his own death just so his wife could claim the insurance money. The British police was alerted and the couple was arrested on fraud charges.
15. Unpaid Credit Cards, Mortgage and Debts
The purpose of an insurance policy is to allow the family to pay off any debts and mortgage. The money is given to the beneficiary, whose name is mentioned in the contract. However, this can change if any of the third parties claim that the deceased’s family is in debt that needs to be paid immediately. In such a case, the beneficiary is denied the money. Since the debt is now passed on to the heirs, the money is first used to settle the mortgage and debt, and then the rest of the money is given to the beneficiary.
16. Black-Out Period
A black-out period is a time frame from when the spouse of the deceased person stops getting survivor benefits to when she starts getting retirement benefits. The insurance policy can get suspended for a number of reasons such as temporary hazardous work or when traveling abroad. Do check with your insurance agent to find out if there are black-out periods mentioned in your policy.
17. The Wrong Policy
Have you searched about the insurance carrier like we mentioned above. What if the insurance agent you contacted is unqualified or worst, a fraud? There are incidents where people paid premiums to so-called insurance agents and later realized that they were being robbed. Sometimes, they find out about the fraud just in time to report the crime. Others are not that lucky and when the time comes for the family to make a claim, by then person had already vanished.
Delicate matters such as these should never be discussed online. It’s better to meet the insurance agent face to face, so that you can get to know how their customer service is. This also gives you an idea about how qualified the agent is. Do read reviews about the insurance carrier online before buying the policy. If you are looking for a qualified insurance agent, who holds years of experience in this field, then visit Pawson. We provide a life insurance policy for families and individuals. To know more about their policies, contact them at 203-481-8898.
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