📋 Life Insurance Claim Denials in California

When a life insurance company denies a death benefit claim, beneficiaries are often left confused and devastated. California law provides strong protections for beneficiaries, particularly through the contestability period rules in Insurance Code Section 10113.5. Understanding these protections is essential for challenging wrongful denials.

Who This Guide Is For

This guide is for beneficiaries who have had a life insurance claim denied in California. Common denial scenarios include:

👤 Named Beneficiaries

Primary or contingent beneficiaries named in the policy who have been denied death benefits

👪 Estate Representatives

Executors or administrators handling claims when benefits are payable to the insured's estate

👥 Successor Beneficiaries

Those entitled to benefits after a primary beneficiary has predeceased or disclaimed

The Contestability Period Explained

The contestability period is a critical concept in life insurance law. During this period (typically two years from policy issuance), the insurer can investigate and potentially rescind the policy based on misrepresentations in the application. After this period expires, the policy becomes "incontestable" - meaning the insurer cannot deny claims based on application misrepresentations.

🔴 During the Contestability Period (0-2 Years)

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During the first two years after policy issuance, the insurer may rescind the policy or deny claims if it can prove:

  • The insured made a material misrepresentation in the application
  • The misrepresentation was about a fact that would have affected the insurer's decision to issue the policy or its terms
  • The insurer reasonably relied on the misrepresentation

Even during this period, the insurer must prove these elements - mere inaccuracies are not enough to void the policy.

🟢 After the Contestability Period (2+ Years)

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Once the contestability period expires, California Insurance Code 10113.5 provides that the policy becomes incontestable. This means:

  • The insurer cannot deny claims based on misrepresentations in the application
  • The insurer cannot rescind the policy for application fraud or material misstatement
  • The only remaining defenses are: lack of insurable interest, non-payment of premiums, or policy exclusions (such as suicide within the policy's suicide exclusion period)

This is a powerful protection for beneficiaries of policies that have been in force for more than two years.

🟡 Common Misrepresentation Defenses

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Insurers frequently deny claims based on alleged misrepresentations about:

  • Medical history: Pre-existing conditions, prior diagnoses, medications, or treatments
  • Tobacco/alcohol use: Smoking status, alcohol consumption, or drug use
  • Hazardous activities: Dangerous hobbies, occupational risks, or travel to high-risk areas
  • Family medical history: Hereditary conditions or family members' health issues
  • Other insurance: Existing policies or prior application denials

Not all inaccuracies justify a denial - the misrepresentation must be material (significant enough to have affected the insurer's decision).

👍 Beneficiary Rights Under California Law

  • Prompt payment: Insurers must pay valid claims within 30 days (Insurance Code 10172.5)
  • Written explanation: Insurers must provide specific reasons for any denial
  • Incontestability protection: After two years, the policy cannot be contested for misrepresentation
  • Bad faith remedies: If the insurer unreasonably denies your claim, you may recover damages beyond the death benefit

⚠ Statute of Limitations

California has strict time limits for filing life insurance claims and lawsuits:

  • Contract claims: 4 years from the denial date (CCP 337)
  • Bad faith claims: 2 years from the wrongful denial (CCP 339)

Do not delay in challenging a wrongful denial. The statute of limitations begins running when the denial is communicated to you.

🔗 Related Guide

If the insurer is acting in bad faith - unreasonably delaying, denying without investigation, or misrepresenting coverage - you may have additional claims beyond the policy benefits. See our comprehensive guide: Insurance Bad Faith in California.

🔍 Evidence to Gather

Collect these documents to support your life insurance claim challenge. Click to check off items as you gather them.

📄 Policy Documents

  • ✓ Complete life insurance policy (all pages, riders, amendments)
  • ✓ Policy declarations page showing issue date and face amount
  • ✓ Beneficiary designation forms
  • ✓ Premium payment history (proving policy was in force)

📝 Application Materials

  • ✓ Copy of the original insurance application
  • ✓ Medical examination records from policy application
  • ✓ Any supplemental questionnaires completed
  • ✓ Agent notes or records from application process

📩 Claim Communications

  • ✓ Death benefit claim form you submitted
  • ✓ Denial letter with specific reasons stated
  • ✓ All correspondence with the insurer
  • ✓ Phone call logs and notes from conversations

🏥 Death Documentation

  • ✓ Certified death certificate
  • ✓ Autopsy report (if performed)
  • ✓ Medical records from final illness or treatment
  • ✓ Police or accident reports (if applicable)

📊 Medical History Evidence

  • ✓ Insured's medical records from time of application
  • ✓ Prescription history at time of application
  • ✓ Evidence showing accuracy of application answers
  • ✓ Expert medical opinion on materiality (if needed)

📅 Timeline Evidence

  • ✓ Proof of policy issue date (for contestability calculation)
  • ✓ Date of death (death certificate)
  • ✓ Timeline showing policy was in force 2+ years
  • ✓ Evidence of any lapses and reinstatements

🔒 Request the Complete Claim File

Under California law, you are entitled to request a copy of the insurer's claim file. This file may contain internal memos, underwriting notes, and investigation reports that reveal whether the denial was reasonable or made in bad faith. Send a written request demanding all documents related to the claim.

💡 Calculating the Contestability Period

The two-year contestability period runs from the policy's date of issue (not the application date). If the policy was reinstated after a lapse, a new contestability period may begin from the reinstatement date. Check your policy carefully - if two years have passed since issue (or reinstatement) and the insured was alive throughout that period, the policy is incontestable.

💰 Damages You Can Recover

When a life insurance company wrongfully denies your claim, California law allows recovery of multiple categories of damages beyond just the death benefit.

Damage Type Description
Death Benefit The full face amount of the policy (the primary amount owed), plus any additional benefits such as accidental death riders if applicable.
Prejudgment Interest Interest at 10% per year (California Civil Code 3289) from the date the claim should have been paid until judgment. This can be substantial if litigation takes years.
Consequential Damages Financial losses caused by the delay or denial - funeral expenses you couldn't pay, mortgage defaults, credit damage, lost income from estate administration costs.
Emotional Distress Mental anguish, anxiety, depression, and emotional harm caused by the insurer's wrongful denial during an already difficult time. Available in bad faith cases.
Brandt Fees Attorney fees incurred to recover the policy benefits. Under Brandt v. Superior Court, these are recoverable as contract damages in insurance bad faith cases.
Punitive Damages Available under Civil Code 3294 if the insurer acted with malice, oppression, or fraud. Punitive damages can exceed the policy value in egregious cases.

When Bad Faith Damages Apply

If the insurer's denial was unreasonable - meaning there was no genuine dispute justifying the denial - you may have a bad faith claim in addition to your contract claim. Bad faith is particularly likely when:

  • The contestability period has expired but the insurer still denies based on misrepresentation
  • The insurer failed to investigate before denying
  • The alleged misrepresentation was immaterial to underwriting
  • The insurer delayed unreasonably before making a decision
  • The insurer misrepresented policy terms or the law

📊 Sample Damages Calculation

Example: Wrongful Denial of $500,000 Life Insurance Policy

Death benefit (face amount) $500,000
Prejudgment interest (10% x 2 years) $100,000
Funeral and burial costs (unpaid due to denial) $15,000
Credit damage and financial hardship $25,000
Emotional distress damages $75,000
Brandt attorney fees $125,000
Compensatory subtotal $840,000
Punitive damages (if bad faith proven) $1,000,000+
POTENTIAL TOTAL RECOVERY $1,840,000+

⚠ Denying After Contestability Period = Strong Bad Faith Case

If the insurer denies your claim based on misrepresentation after the two-year contestability period has expired, this is a clear violation of Insurance Code 10113.5. Such denials are per se unreasonable and almost always support a bad faith claim with potential punitive damages.

🔗 Learn More About Bad Faith

For a comprehensive overview of insurance bad faith claims in California, including how to prove unreasonable conduct and recover punitive damages, see our detailed guide: Insurance Bad Faith in California.

📝 Sample Demand Letter Language

Copy and customize these paragraphs for your California life insurance denial demand letter.

Opening Paragraph
I am writing as the designated beneficiary under Life Insurance Policy No. [POLICY NUMBER] issued by [INSURANCE COMPANY NAME] on the life of [INSURED'S NAME] (the "Insured"). I hereby demand immediate payment of the death benefit in the amount of $[FACE AMOUNT], plus applicable interest, following your company's wrongful denial of my claim dated [DENIAL DATE].
Contestability Period Argument (Policy Over 2 Years Old)
The policy at issue was issued on [POLICY ISSUE DATE]. The Insured passed away on [DATE OF DEATH]. As more than two years elapsed between the policy issue date and the Insured's death, the policy became incontestable under California Insurance Code Section 10113.5. This statute expressly provides that after a life insurance policy "has been in force during the lifetime of the insured for a period of two years from its date of issue... it shall become incontestable by the insurer." Your company's reliance on alleged misrepresentations in the application to deny this claim is therefore unlawful and without legal basis.
Materiality Challenge (For Denials Within 2 Years)
Even if the contestability period had not expired, your denial is improper because the alleged misrepresentation was not material. Under California Insurance Code Section 359 and Imperial Casualty & Indemnity Co. v. Sogomonian (1988) 198 Cal.App.3d 169, a misrepresentation is only material if it would have changed your company's underwriting decision. The [DESCRIBE ALLEGED MISREPRESENTATION] cited in your denial letter would not have affected your company's decision to issue this policy. The Insured's [CONDITION/INFORMATION] was [EXPLAIN WHY NOT MATERIAL - e.g., "a minor condition that would not have changed the risk assessment" or "information that was disclosed to your agent during the application process"].
Bad Faith Allegation
Your company's denial of this claim constitutes bad faith under California law. As established in Gruenberg v. Aetna Insurance Co. (1973) 9 Cal.3d 566, insurers owe a duty of good faith and fair dealing to their insureds and beneficiaries. By denying a claim that is clearly covered - particularly given that the policy is incontestable under Insurance Code 10113.5 - your company has breached this duty. This entitles me to recover not only the policy benefits, but also consequential damages, emotional distress damages, Brandt attorney fees, and punitive damages under California Civil Code Section 3294.
Demand with Deadline
I hereby demand that [INSURANCE COMPANY] pay the full death benefit of $[AMOUNT], plus interest at the legal rate of 10% per annum from [DATE CLAIM SHOULD HAVE BEEN PAID], within [30 DAYS] of the date of this letter. If payment is not received by [DEADLINE DATE], I will file a lawsuit in California Superior Court seeking the policy benefits, bad faith damages, Brandt attorney fees, and punitive damages. I will also file a complaint with the California Department of Insurance regarding your company's unlawful claims practices. Please govern yourself accordingly.
Closing Paragraph
This letter serves as formal notice that your denial is wrongful and that I intend to pursue all available legal remedies if the death benefit is not paid promptly. Every day of continued non-payment increases your company's exposure to interest, damages, and potential punitive liability. I urge you to reconsider this denial immediately and remit payment to avoid costly litigation. Please direct all further communications to [YOUR NAME AND ADDRESS OR ATTORNEY INFORMATION].

🚀 Next Steps

What to do after sending your demand letter.

Expected Timeline

Days 1-14

Insurer receives and reviews your demand letter with their claims and legal departments

Days 14-30

Response expected - payment, settlement offer, or explanation of continued denial

Days 30+

If no satisfactory response, prepare to file lawsuit and regulatory complaint

If They Don't Pay or Respond

  1. Consult a Life Insurance Denial Attorney

    Many California attorneys who handle life insurance denials offer free consultations and work on contingency (no fee unless you win). Given the potential for Brandt fees and punitive damages, strong cases are attractive to experienced plaintiff's attorneys.

  2. File a Complaint with the California Department of Insurance

    Visit insurance.ca.gov to file a complaint. The Department investigates unfair claims practices and can take regulatory action against insurers. While this does not replace a lawsuit, it creates an official record.

  3. File a Lawsuit in California Superior Court

    Life insurance denial cases are typically filed in the Superior Court of the county where you reside or where the insured resided. You can assert claims for breach of contract (policy benefits), breach of the implied covenant of good faith and fair dealing (bad faith), and seek punitive damages if warranted.

  4. Consider Pre-Suit Mediation

    Some insurers are willing to mediate disputes before litigation. A neutral mediator can sometimes facilitate settlement and avoid the cost and delay of a lawsuit.

⚠ Don't Miss the Statute of Limitations

  • Contract claims (policy benefits): 4 years from denial (CCP 337)
  • Tort claims (bad faith): 2 years from wrongful denial (CCP 339)

The shorter 2-year limitation for bad faith claims is particularly important. If you delay too long, you may lose the ability to pursue enhanced damages.

Need Legal Help?

Life insurance denial cases can be complex, especially when insurers raise misrepresentation defenses. Get a 30-minute strategy call with an attorney who handles these claims.

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