Can a life insurance company refuse to make good on a policy?

If you Father stopped paying the premiums, it's entirely possible that it expired.

The issue is there is no evidence of stop payment or anything but it is an easy excuse and then they said they are only required to keep records for 7 years back how can life insurance company get away with that.

Katie, you posted on this issue previously and received some suggestions. Were you able to follow up on them and what additional information did you acquire?

Was it a whole life policy? accident policy? etc. or term?

Contact your state insurance department. They will help you with this. I had to do this with some of my mom's.

I work in the legal department of a large life/annuity company, and I see this kind of question regularly. There is not enough information here to give a more specific response.

I can say that if the policy is active, life insurers generally aren't in the business of rejecting claims to keep money. There are claims settlement standards under law for all 50 states, and frankly, if the policy and claim is "in good order", insurers generally pay. We don't sit around here thinking up ways to keep money on active policies, large or small. But insurers also aren't going to pay on term policies that expired or policies that lapsed. And yes, insurers are permitted by law to destroy records on inactive policies over 7 years of age. It's not an excuse - it's a reality that we can't keep every document forever and the law permits any business to adopt a records retention schedule and each document is coded in accordance with record retention laws (3 years to 10 years, depending on the document). My company happens to retain a lot longer, but insurers aren't forced to hold onto records indefinitely, either, and we are working to clear out such old records for storage/cost reasons.

If the company told you it was expired, it was likely a term policy or it could have lapsed, as well, due to non-payment, no matter what the policy type. If you happen to be the executor of your parent's estate, you can use your appointment paperwork to obtain information on the policy and determine what kind of policy it was, and the policy history or you'll get a formal response as to what kind of policy it was, went it termed out or lapsed, and that the records aren't available due to record retention expiration.

You can certainly file an action with the court, if you wish. You would best be served by giving your authority to the insurer and obtaining the documents (if available) regarding the policy before making a decision to proceed with a court action. If you prefer to go straight to your state's Department of Insurance, that's another way to potentially obtain information, as insurers have procedures and timelines established by each state's laws as to responding to DOI inquiries.

When my father-in-law passed away, we found several small life insurance policies that were no longer active. They were all expired. I think this is very common with the elderly. The may forget about the policy or forget to pay the premium. Some policies are also included with employment and once a person no longer works there, the policy is inactive.

If it was Term Insurance, it is not good after the Term = Expired.

Whole Life Insurance is good for the entire life. Term Insurance is cheaper for a reason. After the Term (often 10 years) the policy is no longer valid.

I am sorry for your loss.

As mentioned here, I would investigate to see if your dad may have lapsed on his payments. Try to gather every single receipt if possible. If it turns out he didn't lapse but instead kept it paid up, I would contact my state department of insurance or the department of insurance wherever this insurance is based. I would also get me a lawyer but only take action if there were no missed payments

This happened to us with my father in-law. He passed away with what we thought was a policy in place. Unfortunately it expired when he turned 65. The catch for us was that they kept deducting the premiums from his account, even after expiration of the policy they continued to be paid for a couple of years after experation.

I don't know where you live but we are in California and after being denied the claim, we filed a complaint with our state commissioner of insurance. After they stepped in they forced the claim to be paid because they had collected the premiums for years after it's expiration of policy.

I guess long story short, If you really don't have a clear answer and believe that this is something you need to pursue you may want to have the state commissioner of insurance review why it was denied. It may take awhile to get an answer but at least you would know?