Many individuals purchase life insurance so their families are protected if they pass away. The individual pays a premium for the insurance during their lifetime, usually monthly. If the policy holder passes away within the policy term, the insurance company agrees to pay a specified amount of money to the beneficiaries.
In addition to replacing the individual’s income or paying for final expenses, life insurance benefits can also be used to pay for larger expenses like a mortgage or other debts.
Sometimes, when beneficiaries send a claim to the insurance company for payment when their loved one has passed away, the insurance company denies it. This can be especially difficult when the beneficiaries are relying on that money to pay daily expenses.
In North Carolina, there is a prompt pay requirement for insurers which requires them, within 30 days of receiving a claim, to either pay the claim or send a notice for the denial to the claimant. The denial notice must state specific, good faith reasons for the denial including benefit limitations and lack of coverage information.
Sometimes, the insurance company will deny benefits because it believes the policy holder did not provide accurate information on the policy application or the death fell outside of the policy’s coverage limits.
If the policy lapsed before the policy holder’s death or if there is no named beneficiary on the policy, those may be additional reasons the benefits are denied.
If beneficiaries have been denied payment by a life insurance company, an experienced attorney can pursue the compensation on their behalf.