Fight a Critical Illness Claim Offer. Here’s How to Fight Back and Win Your Full Payout
Critical illness claim payouts are based on the amount of death benefit attached to the policy, the diagnosis of the insured, the likely effect on life expectancy and a set of variable factors the insurer applies to the claim. It’s a complicated calculation. One could argue that it’s intentionally confusing.
It might be assumed that any cancer diagnosis, heart attack, or stroke will automatically qualify for a full critical illness payout but this is rarely the case. In many instances, claim offers are only a fraction of the policy limit, and in even more extreme situations, critical illness claims are denied entirely.
If your critical illness claim offer was denied, or is substantially lower than what seems
fair, it’s time to fight back.
The Complex Reality of Critical Illness Claims: How Insurers Evaluate Your Claim
Unlike a life insurance claim, where the payment is based on an irrefutable event (death), getting an insurer to pay a Critical Illness claim is far more difficult. Insurers don’t simply accept your doctor’s diagnosis as grounds for approval. Instead, they apply their own non-medical criteria, use their own assumptions, and often rely on their own whims to assess your condition.
This isn’t a system designed to benefit the insured. It’s meticulously crafted to protect the insurance company’s bottom line. To get the maximum payout from your critical illness claim, you must understand their evaluation process and how their payout amount is determined. Then, you have be ready to fight.
Crucially, your policy states that once you receive a critical illness claim offer, you have 60 days to accept it or you lose it and cannot re-file for the same illness again. So you need to know how to fight the claim offer and act quickly. This raises the idea of having a seasoned expert representative working for you from the very beginning to maximize your Critical Illness Claim payment offer as time will be of the essence.
On this page we’ll discuss all the options for fighting a critical illness claim for the maximum payout.
I’ve consistently taken critical illness claims from denied to payable and from low offers to high offers. I know the ins-and-outs of Critical Illness claims better than anyone, and how to hold life insurance companies accountable for what they truly owe when a claim is filed. So here, below, I lay out the realities of fighting for maximum claim payouts.
How Critical Illness Claim Payouts are Calculated (and Rigged Against You)
The Critical Illness addendum contains language describing the way benefits are calculated. Most people will find it very confusing. The calculation relies on something called “factors.” These are various elements that go into determining how much you’ll be offered as a benefit—if you qualify. The problem? These factors are almost always in favor of the insurance company and are worded very loosely. Understanding these factors and their impact on your payout is central to getting a maximum offer from your Critical Illness policy. Most of the terminology is specific to the complex inner workings of life insurance contracts, such as:
- “Loss of premium”
- “Anticipated mortality”
- “Accelerated benefits interest rate”
- “Our assessment of your life expectancy”
Most contracts list 6 to 8 such factors, all designed to reduce the insurer’s payout. One of the biggest items working against the insured is the life expectancy calculation. The insurer doesn’t use generally acceptable tables for this. Instead, they use their own “assessment of life expectancy.” Factors like family history, race, and genetic predisposition—all well-known influences on disease and mortality—are often not taken into account for their claim calculations unless they are demanded and forced to with scientific backing.
Their trick is that if the insureds’ life expectancy doesn’t decrease significantly there’s no reason to offer a large payout. So, if the determination of life expectancy is that of the insurance company, and life expectancy is a significant factor for calculating claim benefits, the outcome isn’t likely to favor the claimant. Tis idea will be discussed several times here.
If you don’t understand these complex factors, you won’t know if you’re getting a fair offer. Claimants need to be protected from unreasonably low critical illness claim offers.
Why Critical Illness Claims Get Denied (and How To Win Them)
There are three primary hurdles to getting a Critical Illness claim paid:
1. Contestability Period / Policy Rescission:
- If the policy is out of its initial 2-year contestability period, it typically passes this hurdle.
- If the policy is still within the contestability period (or faces a new review for the benefit), the insurance company will thoroughly investigate your medical history to determine if you provided any untrue answers on your original application. If they find what they deem “material misrepresentations,” they will try to cancel your entire life insurance policy (including the critical illness benefit) before you can make a claim. This is called policy rescission.
- Let me tell you quite clearly: I win against policy rescissions all the time.
2. Illness Doesn’t Qualify According to Insurer’s Criteria:
- Even if a policy passes the contestability review and a Critical Illness benefit claim is allowed, the most common reason for denial is that the illness doesn’t meet the insurer’s specific, often narrow, criteria.
- This can happen for many reasons depending on the policy: the insurer might deem an illness “not severe enough,” or even argue that your “likelihood of recovery is too high.” It all comes back to those self-serving
“factors” the life insurance company imposes when they evaluate a claim. - The Fight: I’ve seen shocking cases of Critical Illness claims being denied because a cancer “hasn’t spread enough,” or loss mortality isn’t enough,” and so on. I fight these ridiculous conclusions for clients every day of the week and get them the money they’re truly entitled to.
3. Insurer’s Offer is Too Low or Is a Denial:
- The calculation of the “Actuarial Discount” uses variables that only benefit the insurer.
- The insurer assumes the policy would have stayed in force beyond a reasonable age.
- The result of the calculation equation is debits (against) are greater than credits (for) the claimant.
Ways to Fight a Critical Illness Insurance Claim
When agents talk to buyers of critical illness insurance they talk about payouts in large percentage terms. They talk of getting 70%, 80% or 90% of the death benefit paid out. In reality, this is highly unlikely unless the diagnosis is terminal within 12 months. For the more common and less severe diagnosis the critical illness benefit offer will probably be in the range of 10% to 30%. And many will be denied altogether. It’s not that the agents were lying, it’s that agents have no experience with claims – they sell. If this happens to you, your first thought is probably, “What do I do now?” Here we discuss the various ways to fight a claim that is too low or denied.
a) File a Lawsuit – Hire a Lawyer.
Most people immediately assume they need a lawyer to fight for their critical illness claim. While legal action is an option, it’s often not the most effective, fastest, or most cost-efficient path to getting your money because of time, fees and settlements. But if this is the preferred way to fight a claim denial, you should start by interviewing a few candidates.
As with any area of law, there are specialists and generalists. A specialist will be the best attorneys to consider because they won’t need to go through self-education about insurance law, industry practices or claims handling just to represent your claim. So, you won’t be paying them to learn, you’ll be paying them to succeed.
To find an experienced critical illness insurance attorney you can start your research online and use this outline of questions to help narrow your choices.
– How many critical illness insurance cases have you filed?
– How many of those were for claims?
– How many critical illness cases have you appeared in Court for?
– If my case goes to Court, does your fee go up?
– How long will this entire process take?
– What is a settlement?
– If I accept a settlement, how much will I keep?
– Will I have to give a deposition?
– Will the insurer have to pay damages on top of the claim amount?
– How long have you been practicing law?
– Have you had complaints against you as a lawyer?
b) Free Legal Help – Pro Bono.
If you can get past the time it will take, and idea that your claim will resolve in a settlement, but you can’t afford an insurance lawyer, then contacting a local Bar Association may be a good way to fight your critical illness insurance claim offer. Most Bar Associations coordinate free legal help between those in need and local attorneys.
c) Appeal the Offer Yourself.
You can also consider doing your own appeal. A claim challenge doesn’t have to be handled by a lawyer, or anyone other than the beneficiary. Yes, you can appeal a claim yourself – and win. Here’s how:
1. Get the Offer letter from the insurance company so you know the assumptions
they made in their calculation.
2. Research the medical condition diagnosis and related life expectancy studies.
3. Identify how your diagnosis is unique and how it may impact your longevity.
4. Write a detailed outline of why your claim should be paid.
5. Calculate how much you believe the claim should pay.
6. Gather as much supporting documentation as you can find.
7. Put together a detailed argument.
8. Refer to facts that support your claim being paid.
9. Sign the appeal.
10. Fax or mail the appeal to the claims department of the insurance company.
11. Keep copies of everything.
d) Hire a Critical Illness Insurance Claim Expert.
This is not legal representation like a lawyer, but an expert with practical knowledge about claim management and investigations. It’s not a requirement that a critical illness insurance challenge be handled by a lawyer. This option can be as, or even more, effective. Rather than creating a hostile situation by filing a lawsuit, a claim expert can negotiate with the insurance company directly to resolve the claim and get it paid. This creates a “win-win” scenario, as the insurer avoids costly legal battles, and the claimant receives their full payout efficiently.
Get a free review of your critical illness claim offer or denial. For a free review email the denial letter to Steve Burgess at steveb@proplanusa.com. I’ll do a review of the denial and a recalculation of the benefit. If the claim was denied based on a mistake by the insurer I’ll do a fact-based Internal Appeal of the claim to get the benefit paid.
e) Insurance Commissioner Complaint.
Contrary to some understandings, an Insurance Commissioner will not fight a denied insurance claim for a person. What a State’s Department of Insurance can do for a denied claim is force an insurer to answer questions or provide documentation an individual cannot get otherwise. It all depends, of course, on the specific facts at hand but often times an insurer will refuse to share detailed information about it calculated a claim or refuse to provide documents that are helpful to appeal their offer. The Commissioner doesn’t have authority to decide whether a claim should be paid or how much should be offered. But, if a complaint is filed with an Insurance Commissioner, and if it agrees to help, it can force the insurer to divulge the information it was withholding. With the information then revealed, the claimant can make a more informed decision as to whether he or she wants to fight the claim.
f) Small Claims Court.
For claim appeals under $15,000.00, County Small Claims Court should be considered for recovery. Most Counties have a maximum dollar value they’ll allow to be decided by way of their Small Claims Court. And as it’s not feasible to pay a lawyer for such small dollar amounts, Small Claims Court may be the best way to get a binding ruling from a judge. The claimant would still need to prepare their argument, supported by documented
proof, just like doing a self-appeal. The benefit of using a Small Claims Court is that an impartial judge would be the decision-maker, not an insurance company employee.
Regardless of which method of challenge you choose, if you decide to have someone else help or represent you, you should expect the following service:
- No Up-Front Cost: No retainer necessary.
- Comprehensive Claim Management: Gather all necessary records and documents, then meticulously prepare and file your claim.
- Proactive Advocacy: Maintain constant contact with the examiner and proactively address all issues that could limit or deny your claim.
- Transparent Communication: Keep you informed of all developments every step of the way.
- Relentless Fight: Fight any and all attempts by the insurer to deny or limit your claim payment.
- Results-Based Fee: Upon your acceptance of a claim offer, you are paid first, and then you pay fees.
The Cost of Fighting a Life Insurance Claim Denial.
The Dollar Cost, from high to low, is: Attorney, Claim Expert, Do-It-Yourself.
– An attorney will get 40% of the final settlement plus their time-costs. When all is settled the beneficiary will end-up with 40%-50% of the actual settlement a value.
– A Claim Expert will get 10% of the final claim payout.
– Do-It-Yourself will cost the time spent preparing the appeal, obtaining records from medical sources, and the Court fee if Small Claims is used. Then there’s the Lost Opportunity Cost which includes the time that should be spent on healing from the affliction. This is especially true when the emotional pain is considered.
For help with your Critical Illness claim, contact me for a free consultation.