For example, the insurance company may argue that the policy owner failed to timely pay premiums, the insured person didn’t disclose pertinent medical information during the application process, or some other reason allows them to break their promise to pay the claim.
In most cases where a claim is denied, the insurance company will send a claim denial letter explaining why they are refusing to pay, and notifying the claimant that the company is rescinding the policy as if it was never purchased. In almost all cases, the company will also include a check representing the same amount of money that was spent purchasing the insurance and paying the premiums. What they hope is that you will cash the check and go away.
If you receive a claim denial letter, you should consult a life insurance attorney before you cash or deposit that check. Although claims can still be overturned after accepting a refund check, there are some states where it becomes harder as time goes by if you cashed or deposited the refund check. Life insurance companies make mistakes all the time, and sometimes they have to pay these claims.
Insurance companies deny life insurance claims for all kinds of reasons. In many cases, a denial decision can be reversed if you know how to navigate the process. Before you accept defeat, take a few moments to tell us about your situation. It costs you nothing for one of our attorneys who handles life insurance claims to evaluate your case and make sure you are not walking away from money that rightfully belongs to you.

A delayed claim is one where the insurance company hasn’t paid a claim within the time limits set by law. Sometimes the delay is legitimate, and sometimes it’s not. There can be significant penalties if the delay is improper.
Claims can be delayed for many different reasons, but usually it’s a paperwork issue. The company may want to conduct a thorough review of the deceased person’s medical history. This will definitely occur if the insured died within two years of purchasing the policy. Most policies can’t be contested by the insurance company after two years, but if the insurance company can find any material information that was omitted on the life insurance application, it will fight hard to avoid paying claims filed when the insured died within the first two years of the policy’s existence.
Delayed claims can also occur when the insurance company suspects fraud or when there are suspicious circumstances surrounding the death of the insured. Claims can also be delayed if the beneficiary of the policy is a minor child. Many well-intentioned parents and grandparents have caused life insurance payouts to be delayed for years by naming small children as beneficiaries. Unless a parent or guardian goes to court and asks for specific authority to receive the life insurance proceeds on behalf of the minor child, many times these policies won’t pay out until the minor child attains the age of majority.
Delayed claims usually indicate some kind of problem. Many times the problem is minor, but it can also be serious. Because insurance companies are required to pay death benefits timely or face penalties, a good lawyer can leverage the potential consequences of delay to speed up the process.
If your life insurance claim has been delayed, you should consider discussing your situation with a qualified attorney to see if you are being treated fairly. Statistically speaking, the longer a claim is delayed, the less likely it will be paid at all. Therefore, it is in your interest to see that it is paid as quickly as possible.

The vast majority of disputed claims fall into the second category, though we sometimes see claims that were paid to the wrong person.
Instances where the insurance company already paid the death benefit, but they were paid to the wrong person, can occur because of an outright mistake by the insurance company, or in situations where the insurance company permitted changes without authority.  For example, if policy changes cannot be made unless all co-owners sign a form, yet a change form signed by only one owner is approved by the company, the original beneficiary can sue for the death benefit, arguing that the new beneficiary was not properly designated, even after the money has already been paid out.  In such a case, the insurance company could possibly be forced to pay twice.
The much more common scenario occurs when competing claims are submitted after a person’s death, and both claimant’s have a reasonable argument as to why they are the proper person to receive the proceeds.  Usually, competing claims for death benefits are made by children and a step-parent or ex-spouse of the deceased.  If both of the claimants can demonstrate even a possibility that they could be right, the insurance company will probably withhold payment until one of following three things happens:
Many times the insurance company will send letters to the competing claimants giving them a short window of time (usually 30 days) to agree on a division of the death benefit.  This sounds good in theory, but in practice very few people feel like splitting a pot of money with someone who they don’t think is entitled to any of it.
Another possibility is that a claimant can ask an attorney to review the case and run through the laws of the state governing the insurance policy in question with the attorneys for the life insurance company.  Sometimes, not always, the claimant’s attorney can convince the life insurance company that the proceeds should legally be paid to one of the claimants and not the other.  Remember, just because insurance companies sell policies all over the country, they rely on outside lawyers to guide them on the laws of the states.
The third option occurs when the insurance company files an interpleader lawsuit and asks a court to decide who should get the death benefit.  When disputed claims can’t be settled, this is usually what happens.  The downside to interpleader litigation is that once it starts, it can take anywhere from 6 months to 2 years for the matter to be concluded, on average.  All the while, the money is unavailable to the people who need it to pay for life’s expenses.
If you are in the middle of a showdown over the proceeds of a life insurance policy, we strongly recommend that you speak with a life insurance attorney.  If your dispute can be resolved without heading to court, it can save you considerable time and money, as well.  In almost all cases, the life insurance company gets to reimburse itself the money it spends on attorney’s fees and court costs directly from the death benefit.

In order to prevent this kind of double liability, insurance companies would rather have a court decide who should receive the death proceeds when disputes arise.
Most interpleader lawsuits are filed when competing claims are submitted after a person’s death, and both claimant’s have a reasonable argument as to why the claim should not be paid to the other claimant. For example, one person may seek the death benefits by virtue of being the listed beneficiary, while the other claimant may argue that the document changing the beneficiary was coerced or forged. Depending on the facts of the case, either claimant could be correct. So, rather than risk guessing wrong, the insurance company will deposit all of the death benefits with the registry of a court and force the competing claimants to fight it out before a judge decides who receives the money.
Other times, life insurance companies discover legal technicalities that make determining the correct beneficiary a question of law. For example, if a beneficiary of a life insurance policy is not ruled out as a suspect in the death of the insured, the company cannot pay that person without risking the possibility of having to pay the contingent beneficiaries the same death benefit later. This is because a person involved in a homicide cannot benefit from the crime under “slayer” statutes. The point of this example is to show that there don’t have to be competing claimants in order for an insurance company to invoke interpleader. It is appropriate in both cases.
In fact, there are endless scenarios in which insurance companies may seek to interplead death benefits. The important thing to understand is that if you are named as a defendant in an interpleader lawsuit, there is a very good chance you have a claim to some or all of the money.
If you have been served with an interpleader lawsuit (often times called a Complaint in Interpleader), we strongly recommend that you immediately contact a qualified life insurance lawyer to help you through the process. There are strict time requirements for taking action, and it is important that you do not wait to seek help. Our attorneys will review your case free of charge and tell you what they think. If we take your case, our mission will be to get you your money as fast as possible.