You are the beneficiary on a life insurance policy of someone who has died outside of the U.S. It is very likely that although you’ve submitted your claim, the insurance company is delaying payment, and you are afraid the claim might be denied.
Does life insurance cover death overseas? Yes, but there are plenty of reasons foreign death insurance claims are very often delayed and denied. Here’s what they are and what you can do about it.
Where did the insured die? Destination matters.
Insurance companies categorize foreign destinations by the degree of risk the insured takes by visiting them. Countries embroiled in a civil war, insurgency, coup d’etat, and foreign invasion are obviously problematic, as visiting such places puts the insured at high risk of injury and death. Insurance companies’ calculation of risk also includes:
- how extensive and well-maintained the infrastructure is,
- how accessible the healthcare system is,
- whether there is political or social turmoil falling short of all-out war,
- the stability and health of the economy, and
- whether any natural disasters have affected the region.
Insurance companies will categorize foreign destinations as one of the following:
- Acceptable for travel
- Unacceptable for travel
- Acceptable for travel with restrictions.
Restriction on travel to specific destinations may include a limit on time spent there or specified regions, towns, or cities that must be avoided while there.
In general, if the insured visited a destination that is deemed unacceptable for travel and died there, it is likely that your claim will be denied. The same thing will happen if the insured died while visiting an off-limits region within a country or overstays the visit.
Consult with an experienced life insurance beneficiary attorney who can help you challenge the insurance company. It may be that the cause of death had nothing to do with the risks associated with the region or the time spent there. It may also be that if the insured had taken out additional insurance considering where he or she was visiting and for how long, the claim can be paid minus the amount of increase in premium the insured should have paid.
Either way, there is a strong argument for your claim to be paid in whole or in part.
How long was the insured traveling? Length of time abroad matters.
In the previous section, we noted that overstaying a visit in a country that the insurance company has imposed a time limit upon may result in claim denial should something happen to the insured.
More generally, if the insured remains outside of the U.S. for more than six months, the insurance company will likely deem him or her an expatriate. The insurer will put the policy on hold until the insured returns to the U.S., and the insured will not be covered past that six-month mark.
Again, consult with a life insurance attorney. There is always an argument that if the insured had paid more in premiums, he or she would have been covered, and the insurance company might settle with you and payout.
Did the insured die while doing something dangerous?
A life insurance policy will list “exclusions” from coverage. Exclusions are the activities or manner of death that are not covered by the life insurance policy.
For example, if drug or alcohol abuse causes the death of the insured, that might be excluded from coverage. If the insured goes scuba diving yet did not disclose that to his or her insurer, and it is an exclusion, the insured will not be covered if he or she dies while diving.
Every company is different. If your claim is denied due to exclusions, take a good look at that policy. If it truly is an exclusion, often coverage can be extended retroactively to the excluded, and the increase in premium that should have been paid by the insured is simply deducted from the amount of death benefit you should receive.
Did the insurance policy lapse or terminate?
Unfortunately, providing for continuing and uninterrupted payment of premiums is easy to overlook.
It is common for policies to lapse while the insured is traveling abroad, whether because the insured did not receive the bill in the mail, or, the account the inured was using to pay the premium automatically was underfunded,
Either way, if payment fails, the insured should have received statutory notices from the insurer regarding possible lapse and termination of his or her. If the insured did not receive those notices, you can argue that if he did, there would be no lapse in coverage. Again, a life insurance beneficiary attorney can help you look into this and make this argument.
How long did the insured have the life insurance policy?
If the insured’s policy has been in effect less than two years and dies, that death falls within what is called the “contestability period.” If something happens to the insured during the contestability period, the insurance company has heightened power to review the insured’s initial application and medical questionnaire and deny beneficiaries’ death benefit claims if there are any errors.
The contestability period was established to prevent insurance fraud. For example, if someone knew they have 6-12 to live due to cancer or some other disease or illness, and took out a life insurance policy but did not disclose that, he or she commits misrepresentation and beneficiaries’ claims will be denied.
Unfortunately, the insurance company will also use their power during the contestability period to deny claims because the insured made harmless errors or mistakes that are wholly unrelated to the insured’s cause of death. If this happens, beneficiaries need to consult an experienced life insurance attorney to fight their case.
Beneficiaries – don’t take claim delay or denial lying down. Consult with an experienced life insurance attorney and fight the insurance company to get the payout the insured intended that you get!
About the Author
Veronica Baxter is a blogger and legal assistant living and working in the great city of Philadelphia. She frequently works for Chad Boonswang, Esq., a busy life insurance beneficiary attorney.