PSI Life Exam Practice Test

What is a common reason for insurers to deny claims?

1. Poor customer service

2. Lack of available funds

3. Failure to meet policy requirements

4. Changes in legislation

The correct answer is: Failure to meet policy requirements

Insurers often deny claims due to failure to meet policy requirements, which is a fundamental aspect of how insurance coverage is structured. Insurance policies outline specific conditions, terms, and requirements that must be satisfied for a claim to be valid. If a policyholder does not adhere to these stipulations—such as failing to pay premiums on time, not providing required documentation, or making claims for exclusions outlined in the policy—then the insurer is within their rights to deny the claim. This principle ensures that both the insurer and the insured are clear on their obligations and the protections afforded by the policy. In contrast, poor customer service, lack of available funds, and changes in legislation do not directly relate to the validity of a claim as dictated by the policy terms. Poor customer service may lead to dissatisfaction but does not typically influence the underlying reasons for a claim denial. Similarly, an insurer's financial status or external legal changes might impact operations generally, but they are not specific reasons for denying claims based on the details of individual policies.