People purchase life insurance policies to ensure their loved ones have the financial resources to recover after they (the policyholder) die. However, insurance companies generally don't like paying claims and will look for any excuse to deny them. Here are two reasons why your insurance provider may not pay out.

The Type of Death Is Excluded

Many people believe that, with the exception of suicide, life insurance companies will pay claims regardless of how the policyholder died. Unfortunately, this isn't true. All insurance companies either exclude certain types of death or have conditions that must be met for a claim to be approved based on the policyholder's method of demise.

For example, some insurance companies will pay claims on suicides, but only after the policy has been in effect for 2 years. Other companies will exclude deaths caused by certain diseases (e.g. HIV/AIDS) or high-risk activities (e.g. base jumping, scuba diving). Still other companies won't pay any death benefits if the policyholder dies from any cause within a certain amount of time after taking out the insurance.

It's critical you read your policy to determine what the exclusions and restrictions are. Be aware, though, the insurance company may still find a way to avoid paying the claim. This will typically happen in cases where there may be some dispute as to how the person died. For instance, the person was hit by a vehicle but there was a suicide note found in the home. The insurance company may decide the decedent committed suicide and you would have to work with an attorney to prove otherwise to get the payout.

The Employer Misrepresented the Insurance

Another reason why your claim may be denied is if the decedent's employer misrepresented the insurance or makes a mistake, causing you to make errors that led to the rejection. For instance, the employer tells the employee's family that it will submit the necessary paperwork for the claim to then group insurance company but then fails to do so. Another common mistake employers make is by misrepresenting employees' information to the insurance company (e.g. list the person as single when he or she is married).

If you claim is denied due to an employer's negligence, you may be able to collect compensation directly from the company for your loss by filing a personal injury lawsuit against it. You'll need to show how the company's actions or lack of action lead to the denial of benefits, which may result in the court awarding you what you should've been paid if the company had acted appropriately.

For more information about or assistance with this issue, contact a personal injury attorney at firms like Gelman Gelman Wiskow & McCarthy LLC.