Why a Life Insurance Company May Investigate a Claim

Jason Turchin, Esq.

When a life insurance policyholder passes away, beneficiaries expect the insurance company to pay out the death benefit promptly. However, in some cases, the insurance company may choose to conduct an investigation before approving the claim. This process, while often routine, can cause delays and may be stressful for beneficiaries. Below, we explore the common reasons why a life insurance company may investigate a claim and what this investigation typically involves.

1. Contestability Period

One of the most common reasons a life insurance company investigates a claim is due to the policy being within the contestability period. This period, usually the first two years after the policy is issued, allows the insurer to review the policyholder’s application and ensure that all information provided was accurate.

During the contestability period, the insurance company has the right to investigate claims more thoroughly. If they find any discrepancies in the application, such as omitted medical conditions or misrepresented lifestyle habits, they may deny the claim or adjust the benefit amount. Even if the cause of death is unrelated to the alleged misrepresentation, the insurer can still investigate and potentially deny the claim if the application was inaccurate.

2. Suspicion of Fraud

Life insurance fraud is a serious issue, and insurance companies are vigilant about protecting against it. If an insurer suspects that fraud is involved—either through falsified death certificates, staged deaths, or fraudulent policies—they will investigate the claim thoroughly. This could involve requesting additional documentation, interviewing witnesses, or even hiring private investigators to verify the legitimacy of the claim.

Fraudulent claims not only harm insurance companies but also drive up premium costs for all policyholders. To protect against this, insurers are particularly cautious with claims that present red flags, such as claims made shortly after the policy was purchased, or when the policyholder’s cause of death is suspicious or unclear.

3. High-Value Policies

Claims involving large death benefit payouts are more likely to undergo scrutiny. Insurance companies are naturally more cautious when large sums of money are at stake, and they may want to ensure that all aspects of the policyholder’s death and the claim are legitimate. For instance, a claim involving a multi-million-dollar life insurance policy may take longer to process, as the company may investigate the circumstances of death more thoroughly to confirm that there was no foul play, misrepresentation, or fraud involved.

4. Policy Lapse or Premium Non-Payment

If the policyholder missed premium payments or allowed the policy to lapse before their death, the insurance company may investigate whether the policy was still in effect at the time of death. Most life insurance policies include a grace period for late payments, but if the payment was missed beyond the allowed time, the insurer may deny the claim. In these cases, the investigation will focus on whether the policyholder made the required payments and whether the policy was still active.

5. Cause of Death Exclusions

Life insurance policies often have exclusions for certain causes of death, such as suicide or death related to hazardous activities. For example, if a policyholder dies within the first two years of the policy due to suicide, the insurer may deny the claim based on a suicide exclusion clause. Similarly, if the policyholder died while participating in a high-risk activity, like skydiving or scuba diving, and the policy excluded such activities, the insurance company may investigate whether the exclusion applies.

6. Beneficiary Disputes

In cases where multiple parties claim to be the rightful beneficiaries, or when there are last-minute changes to the beneficiary designation, the insurance company may investigate to determine the validity of the claim. Disputes between family members or allegations of fraud or undue influence can trigger an interpleader action, where the insurance company asks the court to decide who should receive the payout. During this time, the insurer may delay paying the benefit until the dispute is resolved.

7. Accidental Death Riders

Some life insurance policies include accidental death riders, which provide additional benefits if the policyholder dies as a result of an accident. When a claim is filed for accidental death benefits, the insurer may investigate the exact cause of death to determine whether it qualifies as an accident under the policy’s terms. If the death was caused by natural causes, suicide, or another excluded event, the accidental death benefit may not be paid.


What Does a Life Insurance Investigation Involve?

When a life insurance company investigates a claim, they may take several steps to gather information and verify the legitimacy of the claim:

  • Requesting Documentation: The insurer may ask for additional documents, such as medical records, death certificates, police reports, or autopsy reports, to confirm the cause of death and ensure that there was no misrepresentation in the application.
  • Conducting Interviews: In some cases, the insurance company may interview family members, doctors, or witnesses to gather more information about the policyholder’s death.
  • Reviewing the Application: The insurer will carefully review the original application to check for any discrepancies or misrepresentations.
  • Hiring Investigators: In cases of suspected fraud, insurance companies may hire private investigators to verify the circumstances of the policyholder’s death or investigate any suspicious activities.

Florida Life Insurance Lawyers

While most life insurance claims are processed without issue, certain factors may prompt an investigation by the insurance company. The contestability period, suspicion of fraud, high-value policies, premium non-payment, cause of death exclusions, and beneficiary disputes are just some of the reasons why an insurer may choose to scrutinize a claim more closely. If you are facing an investigation or if your claim has been denied, it is important to understand your rights and options.

At the Law Offices of Jason Turchin, our experienced life insurance attorneys can help you navigate the claims process and represent you if an investigation arises. Contact us today at 800-337-7755 for a free consultation. You won’t pay any fees or costs unless we win or settle your case.

Let us help you recover the benefits you deserve from your life insurance policy.

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