What Is Life Insurance and How Does It Work?

What is Life Insurance?

Life insurance is similar to property insurance, or flood insurance, in that it provides financial assistance once a covered loss has occurred. For property or flood insurance, you pay a premium each month to provide assurance that if there is future damage to your property, you will have the financial resources to fix it or “make you whole”. Life insurance is a similar idea where the policy owner pays a premium each month to provide assurance that if the insured person passes away, their financial contribution to the relationship will be replaced, or their final expenses will be covered.

Basically, a life insurance policy pays out a death benefit to the named beneficiary when the insured person dies. That money can usually be used for any reason, but is commonly meant to pay funeral expenses, hospital bills, as income replacement, or as child support.

What is Required?

The following are common types of insurable relationships:

• Spouses
• Parent/Child
• Business Partners
• Mortgage Company/Homeowner
• Debtor/Debtees

These types of relationships have what is called an “insurable interest.” An insurable interest is essentially a strong enough relationship between the owner and the insured person that will prevent one or both involved parties from taking out the policy for fraudulent purposes. An insurable interest is normally required before a person can take out a life insurance policy on the life of another person. This requirement also prevents a person from taking out a life insurance policy on a complete stranger in the hopes of a quick payout.

How Does a Life Insurance Claim Work?

Generally, in an insurable interest relationship, the death of one of the involved people would likely leave the other person responsible for large amounts of debt or financial obligations. The death benefits from a life insurance policy would ideally cover those obligations to keep the living person financially stable. The person who receives the death benefits after the insured person dies is called the “beneficiary.” Normally, the beneficiary is designated prior to the insured person’s death and is responsible for initiating their claim for death benefits with the insurance company. Once the insurance company is notified of the insured’s death, they will begin requesting a myriad of documents and information from the beneficiary to determine whether benefits are payable. It is at this stage where problems usually arise.

How a Life Insurance Lawyer Can Help With Delayed or Denied Claims

As soon as an insurance company starts delaying a claim, or sends and outright denial of a life insurance claim, that is when a life insurance law firm is needed. A life insurance lawyer will communicate with the insurance company on your behalf, submit appeals supported by the law, and file a lawsuit if necessary to get you the benefits you deserve. Many claimants try to handle their delayed or denied life insurance claim on their own and end up wasting the limited appeals allowed on their claim making it very difficult for an attorney to assist them.

Contacting Life Legal to assist you with a delayed or denied life insurance claim will cost nothing out of pocket. We work on a contingency fee basis which means we only recover our fees if you win.