Life insurance serves an important function. It's there to protect the policyholder's loved ones, in the event of the policyholder's death. In practice, insurance products like these usually work exactly as intended. But there are a few cases where legal disputes between the insurer and the insured can leave would-be beneficiaries in a precarious situation.
Types of life insurance
Life insurance can be categorised in several ways. There is 'term' life insurance, and 'whole of life' insurance. The former is time-limited. You'll need to die within the specified interval for a claim to be successful. The latter will last right up until the moment you die.
There are smaller, technical differences between different life insurance policies, too. You might get a payout, for example, when you're diagnosed with a terminal illness before the end of the policy. You might also have the option to cover yourself against critical illness.
Life insurance is not an investment product, however, and so has no cash value unless a claim is made. If you fail to make payments, then the entire plan will be cancelled, too.
Why might a claim be rejected?
There are many opportunities for your insurer to refuse a payout, depending on the way that the policy is worded. The information provided at the start might not have been accurate, as a result of deception or simple error. The insurer might adjudge that you didn't take 'reasonable care' to protect your own life, or that your loved ones failed to follow the proper procedure when making a claim.
What can I do?
If you're in this situation, there are a few things you might do to improve your chances of getting the money you're owed.
Check the paperwork
Don't take the insurer's word for it. Check the documents to see whether there really has been an error. Make a note of the exact wording of the document. If you feel that the information was unclear or poorly expressed, then this might be grounds for an appeal.
Contact the insurer
Before you escalate the matter, you'll want to give your insurer notice. Write a formal letter, and put it through the company's internal review process. It might be that they decide to pay up, especially if they think that they will ultimately lose any ensuing court case.
Get a solicitor
A solicitor specialising in professional negligence will fight on your side to prove that you (or your surviving family) are owed compensation. This is a different kind of representation, since you'll need to pay for it. However, the results might be better, and the process might be accelerated.
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