What To Do If Your Life Insurance Company Denies a Claim (2024)

Your life insurance claim could be rejected for several possible reasons. Some of the more common denied claim reasons include the following.

Policy Delinquency

If you don’t pay your premiums on time, your policy will lapse, and when a beneficiary files a claim, they will have no standing to collect a benefit. If you are a policy owner and purposely let a policy lapse because the term life insurance ends due to non-payments, be sure to let your beneficiaries and financial advisers know so there are no surprises later on.

Material Misrepresentation

If you make significant, factual bad faith errors or omissions on your life insurance application and the insurer finds out at any time, that may put your claim at risk. If the insurer discovers the discrepancy before you die, your policy may be subject to cancellation or modification at the company’s discretion.

Other material misrepresentations can include lying about your income, non-disclosure of other life insurance policies, failure to disclose medical conditions or treatments or misrepresentation of your immigration status, among others. However, a minor omission, such as not reporting that you’ve visited the doctor in the past year, probably won’t cause a denial.

Contestable Circumstances

Contestable circumstances involve a death outside the scope of life insurance coverage, which includes the timing of the death that falls within a contestable timeframe (usually the first two to three years a policy is in force).

Contestable circumstances include things like suicide during the contestability period or dying while performing an illegal act. Older policies may also have exclusions such as death during military service, acts of war, aviation, dangerous hobbies such as scuba diving and mountain climbing or risky health lifestyles that could lead to HIV or AIDS.

Some misrepresentations of facts are grounds for denying or reducing a death claim, even if they’re discovered after the contestability period. For example, if the insurer learned that the decedent convinced a physician to provide false information to hide a medical condition, this would be grounds for denying a death benefit claim.

Lack of Appropriate Documentation

Family members or beneficiaries sometimes forget to include the necessary paperwork to file a death benefit. At a minimum, a death certificate is required to start a claim, but other supporting documentation may also be required.

Other less common reasons why a claim may be denied are if the insured’s spouse or ex-spouse filed a beneficiary dispute, a group policy was not converted to an individual policy or the submission has insufficient proof of death overseas.

Understanding all the rights and terms in your life insurance policy can be daunting. Your life insurance policy is a binding document, and as such, it has a lot of legalese and industry-specific jargon, but don’t let this intimidate you.

You should be aware of several things and look at them closely before you buy a policy or when you have your issued policy in hand. Those important policy features include:

• Personal information: Make sure your name, birth date and all other personal information is accurate.
• Death benefit amount: Double-check to make sure the death benefit matches how much life insurance you decided to purchase.
• Effective date: This is the date your coverage becomes active and your policy is in force. If you die before your policy’s effective date, your beneficiaries will not receive the life insurance payout, even if you die after your policy’s issue date and you were approved for coverage. The issue date is the day the insurance company creates the policy. This is different from when the policy’s terms and conditions become active, which is the effective date.
• Declarations page: This is also known as policy specifications or a schedule of benefits. Be sure that what you think you bought matches what the insurer delivers to you. If you customized your policy by adding riders, check to make sure all are included along with any policy premium costs. Document your policy number and make it easy to find later when it’s needed.
• Beneficiaries: Confirm that your correct beneficiaries are accurate.
• Term length: If you bought term coverage, be sure the term is accurate. For permanent policies that may have variable premium payments, your policy will provide a table with the insurance premiums over time.
• Conversion Rights: Many policies allow the life insurance policy owner to convert it to a permanent life policy at the end of its term.

If you have submitted a life insurance claim and it was denied, the insurance company must provide a written explanation of why it was denied. If you believe your claim should not have been denied, contact the insurance company to see if they will reconsider their decision.

Sometimes, your claim may be approved after you provide additional documentation missing from your original submission. This may be a death certificate, medical records, autopsy reports or insurance payment receipts.

When you contact the insurer, remove emotions connected to your grieving and understand you are working through a contract issue. Stick to the facts and get clear and specific guidance on what you can do to rectify a situation. Sometimes you will have options and other times, the evidence favoring a denial will be clear-cut.

In cases involving employer group life insurance and similar policies, only a 60-day window exists to appeal the denial.

Other Options If Your Claim Has Been Denied

Hire an attorney. A good option may involve hiring a life insurance attorney to negotiate and navigate your denial. Their legal expertise and deep understanding of claim processes could prove a powerful ally as you work to get your claim approved.

Consider an alternative resolution. Think about pursuing alternative resolution options such as arbitration or mediation.

File a complaint if you think your claim has been wrongly denied. Consider filing a consumer complaint with your state’s department of insurance or attorney general. This doesn’t always produce results, but it can be helpful to further document your efforts. Some states employ insurance appeals specialists, which means state-level representation carries substantial weight.

Although you will be in the midst of a grieving process, it’s important to pursue your options as quickly as possible. Depending on the option you choose, a resolution through an appeals process could take months to collect life insurance benefits, and it’s best to brace yourself for what could be a lengthy process.

Depending on the reason for your claim denial, you may have legitimate options to resolve the denial in your favor. Missing documentation is often the case, and gathering and submitting a death certificate, medical history or other missing materials can take care of the denial in short order.

Other reasons for denials may be more problematic and require a longer process that could involve hiring a life insurance lawyer or working with state insurance officials to fully investigate whether the denial has merit or not. When shopping for life insurance from a top-rated company, be sure that you understand your policy well so that you can make things easier for your beneficiaries should they need to file a claim.