Life Insurance Claim Investigation
The ins-and-outs of a life insurance claim investigation, as explained by a 30-year veteran of contestable life insurance claims.
What Is a Life Insurance Claim Investigation?
A Life Insurance Claim Investigation is a thorough and exhaustive effort by a life insurance company to discover any opportunity to deny a death claim.
We represent beneficiaries of life insurance claims for new claim filings, delayed claims and denied claim appeals.
Here we answer the most common questions about life insurance claim investigations, such as:
- Why can a life insurance claim be investigated?
- What is involved in a life insurance claim investigation?
- What can I do to make sure I get the money when my life insurance claim is under investigation?
- How long does the insurance company have to investigate my claim?
- How many death claims are denied?
- What can I do if my death claim is under investigation?
Why can a life insurance claim be investigated?
If a death claim is under investigation, it means the policy was less than 2 years old when the insured died. This is known as the Contestable Period and every life insurance policy has a Contestability clause. The clause states that the insurer can do an investigation into the accuracy of the answers that were given on application and deny the claim is there are any material misrepresentations.
The only time a policy doesn’t have a 2-year Contestability period is when the policy was issued on a guaranteed-coverage basis (usually through an employer) and there were no health history questions asked on the application.
Many people think that a life insurer will get their medical records, and other records, when they apply for the policy. This is not correct. More and more, insurers do not get any records when a person applies for coverage. Instead, in an effort to reduce expenses, they rely on the accuracy of the answers on the application instead of doing their own independent review of information. When a death claim is under investigation however, the insurer will get all the records they can find.
Their intent is to keep their costs low when they issue a policy and then to look for anything that gets them out of the responsibility to pay a claim when the person dies. And that is what a Life Insurance Claim Investigation is for from the perspective of an insurer.
In contrast to the insurer’s claim investigation, our claim investigations look for reasons why the insurer is obligated to pay a claim. We represent beneficiaries, never the insurers.
What’s involved in a life insurance claim investigation?
When someone applies for life insurance they complete an application. The application asks questions about the person’s medical history, their criminal history, their finances, their driving record and their participation in dangerous activities (such as scuba diving and sky diving). The insurer reviews these answers and then makes a decision to offer a policy or decline to offer a policy depending on the answers the applicant has given.
When a life insurance claim is investigated the insurer searches for records related to all these topics. This can be things such as medical records, prescription drug records, driving records, criminal records, tax returns and psychological therapy records.
When they find any of these they examine the records and compare what the records state versus what was recorded on the life insurance application.
One example is when the insurer obtains the insured’s medical records. For example, a medical record may state the person was treated for anemia. The examiner then goes to the question on the application about “Anemia” or “Blood Disorders” and views how the person answered the question on the application. If the insured marked a “Yes”, then the claim investigator moves on to the next item. If the applicant marked “No” the investigator makes a note in the Claim file, and this will be the basis to deny the death claim.
The same process is followed for financial information. The application question asks, “What is your earned income?” In a death claim investigation the insurer will obtain tax records to verify if the insured answered the income question accurately. If they didn’t, again, the insurer will use this to deny the claim.
This process of obtaining records can take many, many months. Its’ important for a claimant to know their rights and what information the insurer is actually entitled to so that the claim doesn’t drag-on for an unreasonable amount of time.
What can I do to make sure I get the money when my life insurance claim is under investigation?
We remind people, “If a life insurance company wants to pay a death claim they won’t spend time and money doing an investigation. Insurers investigate claims so they don’t have to pay them.”
A beneficiary is not a client of a life insurance company.
As the beneficiary of a contestable life insurance claim you may be asked to do many things by the insurer, such as:
- submit to a telephone interview,
- sign a release for all medical records,
- provide documented proof of income, and
- provide marriage, birth and death certificates.
Complying with everything an insurer asks for will not help get the claim paid. In fact, it may delay the claim investigation and, at worst, cause the claim to be denied.
As a beneficiary you are not responsible for doing the work of the insurer’s claim examiner. Your participation should be limited to only the things you’re obligated to do. The insurer’s efforts should be limited to only the things they are entitled to and are relevant to the claim.
How long does the insurance company have to investigate my claim?
A life insurance claim investigation cannot take longer than is necessary for the insurer to obtain relevant information and make a decision within 30 days.
If an insurer is entitled to certain medical records you can contact that medical office and ask them to send the records to the insurer. If the insurer is entitled to obtain a divorce or marriage certificate you can go to the county records office yourself to obtain it. Efforts like this help get a claim processed more quickly.
What doesn’t help is trying to get records or information for an insurer when they aren’t entitled to it. Entitlement is determined by State laws and application questions.
How many death claims are denied?
Because insurers refer to the denial of a contestable life insurance claim as a “rescission”, there’s no accurate public record for how many claims are denied.
In a 2010 article Lisa Girion and Sandra Poindexter of the Los Angeles stated $375 million of claims were denied in just one year alone (LA Times Article). The true number is likely much higher.
What can I do if my death claim is being investigated?
We represent beneficiaries during the claim process to assure their claim is handled properly and paid quickly. If the insurer is violating the claimant’s rights or policy provisions, we’ll shut them down and protect the beneficiary so their claim is handled fairly and paid.
When you need help getting your life insurance claim paid, Contact us:
The Center for Life Insurance Disputes.
1-888-428-4868
Copyright June 23, 2021
