Life insurance provides financial protection to individuals and their families in the event of their unexpected death. When an insured person dies, the designated beneficiaries file a claim with the insurance company to receive the benefits of the policy. However, before the claim is paid out, the insurance company conducts a thorough investigation to ensure that the claim is valid. 

In this blog post, we will explore the process of a life insurance claim investigation.

What Does It Mean When Your Insurance Claim Is Under Investigation?

A life insurance claim investigation is an examination conducted by the insurance company to verify the validity of a life insurance claim. The investigation process helps to prevent fraudulent claims and ensures that the beneficiaries receive the correct payout according to the policy terms.

The investigation process involves gathering information about the deceased person’s death, including medical records, police reports, and other relevant documents. The insurance company may also interview witnesses, family members, and friends of the deceased person to gather additional information.

If your life insurance claim is under investigation, it does not necessarily mean that the insurance company suspects you of fraud or wrongdoing. It is a standard procedure that insurance companies follow to ensure that the claim is legitimate and that they are not paying out benefits for fraudulent claims.

The investigation process can take some time, and the length of time it takes can vary depending on the complexity of the claim and the availability of information. The insurance company may not make any payments until the investigation is complete and they have verified the validity of the claim.

Do All Life Insurance Policies Get Investigated?

Not all life insurance policies get investigated. Life insurance companies may investigate a claim if there is suspicion of fraud or if there are discrepancies or inconsistencies in the information provided on the application or in the death certificate. 

The insurance company may also investigate a claim if the policy has exclusions for certain types of deaths, such as suicides or deaths caused by illegal activities. Additionally, if there is a dispute among the beneficiaries about who is entitled to the death benefit, the insurance company may investigate the claim to determine the rightful beneficiary.

Most life insurance policies have a contestability period, which is usually the first two years after the policy is issued. During this period, the insurance company can investigate the insured person’s medical history and other information provided on the application. If the company finds any misrepresentations, it can deny the claim. After the contestability period, the insurance company has limited grounds to deny a claim.

Reasons for a Life Insurance Claim Investigation

There are several reasons why an insurance company may initiate a life insurance claim investigation. Some of these reasons include:

1. Suspicious Circumstances – If the policyholder’s death was sudden, unexpected, or suspicious, the insurance company may investigate the claim to rule out foul play or suicide. If the circumstances surrounding the claim are unusual or suspicious, the insurance company may investigate to rule out fraud or wrongdoing. For example, if the policyholder dies in suspicious circumstances or there is evidence of foul play, the claim may be investigated. For example, many claims involving a death in a foreign country get investigated. Foreign countries follow different guidelines for reporting a death and sometimes the documents insurance companies rely on are not available in such claims which may trigger an investigation. 
2. Misrepresentation – One of the most common reasons life insurance companies will not pay out is material misrepresentation. If the policyholder provided false information on the insurance application or failed to disclose important medical conditions, the insurance company may investigate the claim to determine if the policy was obtained fraudulently.
3. Contestability Period – Most life insurance policies have a contestability period, which is usually the first two years after the policy is issued. During this period, the insurance company can investigate the policyholder’s medical history and other information provided on the application. If the company finds any misrepresentations, it can deny the claim.
4. Beneficiary Disputes – If there is a dispute among the beneficiaries about who is entitled to the death benefit, the insurance company may investigate the claim to determine the rightful beneficiary.
5. Policy Exclusions – Some life insurance policies have exclusions for certain types of deaths, such as suicides or deaths caused by illegal activities. Most accidental death policies have many exclusions. If the insured person’s death falls under an exclusion, the insurance company may investigate the claim to determine if the exclusion applies.

How Do Life Insurance Companies Investigate Claims

Life insurance companies use various methods to investigate claims to verify their validity. The investigation process can be complex and time-consuming, depending on the circumstances surrounding the claim. 

Here are some common methods used by life insurance companies to investigate claims:

1. Reviewing Claim Documents – The insurance company will review the claim documents, including the death certificate, policy documents, and any medical records, to determine if the claim is valid;
2. Interviewing Witnesses – The insurance company may contact witnesses, such as family members, friends, or co-workers, to gather additional information about the circumstances surrounding the policyholder’s death;
3. Reviewing Medical Records – The insurance company may review the medical records to determine if there were any pre-existing medical conditions that may have contributed to their death;
4. Investigating Police Reports – If the insured’s death was the result of an accident or involved law enforcement, the insurance company may review police reports and other official documents to gather additional information;
5. Background Checks – The insurance company may conduct background checks on the policyholder and the beneficiaries to rule out any criminal activity or fraudulent claims.
6. Hiring Private Investigators – In some cases, the insurance company may hire private investigators to conduct further investigations, including surveillance and background checks, to gather additional information about the claim. Investigations into foreign country deaths often involve an investigator who may travel to the country of death to gather information for the insurance company. 

Insurance companies need to follow strict guidelines and ethical standards when investigating claims. If you are a beneficiary of a life insurance policy, it is important to cooperate fully with the insurance company’s investigation to ensure that your claim is paid out in a timely and fair manner.

What Happens When You Get the Results of the Investigation?

When the insurance company completes its investigation, it will provide the results to the beneficiaries of the life insurance policy. The results of the investigation can vary, depending on the circumstances surrounding the claim.

Here are some possible outcomes:

1. Claim Approved – If the insurance company determines that the claim is valid and there is no evidence of fraud or wrongdoing, they will approve the claim and pay out the death benefit to the beneficiaries according to the policy terms;
2. Claim Denied – If the insurance company determines that the claim is invalid or there is evidence of fraud or wrongdoing, they may deny the claim and not pay out any benefits. The beneficiaries can appeal the decision, but they will need to provide additional evidence to support their claim.
3. Reduced Payout – If the investigation reveals inconsistencies of the claim documents and the insured’s records, the insurance company may reduce the payout according to the policy terms.

The  insurance company must provide a clear explanation of their decision and the reason for it. If the beneficiaries disagree with the decision, they have the right to appeal and provide additional evidence to support their claim.

How Long Does a Life Insurance Company Have to Investigate a Claim?

The time it takes for a life insurance company to investigate a claim can vary depending on the complexity of the claim and the circumstances surrounding the insured’s death. However, life insurance companies have a legal obligation to conduct an investigation and make a decision about the claim within a reasonable amount of time.

The timeframe for the investigation and decision-making process is typically controlled by the policy contract and state laws. In most cases, insurance companies have a specific timeframe, such as 30, 60, or 90 days, to investigate and make a decision on a claim after receiving all necessary documentation and information from the beneficiaries.

If the investigation takes longer than the specified timeframe, the insurance company must provide a reason for the delay and give the beneficiaries an estimated timeframe for the decision. If the delay is unreasonable, the beneficiaries may have legal options, such as filing a complaint with the state insurance department or taking legal action against the insurance company.

Beneficiaries can help expedite the investigation process by providing all necessary information and documentation promptly and cooperating fully with the insurance company’s investigation. Working with a life insurance attorney competence in handling life insurance investigations may also expedite the payout. 

Can Beneficiaries Avoid Claim Investigations?

Beneficiaries of a life insurance policy cannot avoid claim investigations by the insurance company. Insurance companies are required to conduct an investigation to verify the validity of the claim before they pay out any benefits. The investigation is a standard procedure that insurance companies follow to prevent fraudulent claims and ensure that they are paying out benefits for legitimate claims.

As a beneficiary of a life insurance policy, you have a responsibility to cooperate fully with the insurance company’s investigation. This means providing any information or documentation requested by the insurance company, such as medical records, police reports, or witness statements.

Avoiding or delaying the investigation process can result in delayed or denied benefits, as the insurance company needs to complete their investigation before they can pay out any benefits. In some cases, delaying or avoiding the investigation process can also raise suspicions and potentially result in a more thorough investigation.

What to Do When Your Life Insurance Claim Is Under Investigation

If the insurance company suspects fraud or other wrongdoing, it may conduct a more extensive investigation, including hiring a private investigator or involving law enforcement. If you are a beneficiary of a life insurance policy, it is best to be honest and forthcoming with the insurance company during the investigation process to ensure that your claim is paid out in a timely and fair manner. 

By working with an experienced life insurance attorney during life insurance claim investigation you will make sure your rights to the policy are protected. Call us at 888-510-2212 for a free confidential case evaluation.