Understanding Life Insurance Disputes

Life insurance is supposed to provide financial security for your loved ones when you pass away. But insurance companies have financial incentives to deny or delay claims, and they use sophisticated tactics to avoid paying benefits - often when families are most vulnerable.

The most common life insurance disputes involve:

  • Material misrepresentation claims - The insurer alleges the policyholder lied or omitted information on the application
  • Contestability period denials - Death occurs within the first two years of the policy
  • Beneficiary disputes - Multiple parties claim entitlement to the death benefit
  • Lapse or non-payment - The insurer claims the policy was not in force at the time of death
  • Suicide exclusions - Death is characterized as suicide to invoke policy exclusions
  • Accidental death disputes - Disagreements about whether death was "accidental" under AD&D policies
California Note

California Insurance Code Section 10113.5 requires life insurers to provide specific notices before a policy lapses due to non-payment. Failure to provide proper notice can invalidate a lapse defense. California also has strong bad faith protections that may entitle beneficiaries to damages beyond the policy amount when claims are wrongfully denied.

Life Insurance Dispute Guides

Explore detailed guides on specific life insurance issues. Each guide provides practical information on fighting back against unfair claim denials.

X

Denied Death Benefit Claims

What to do when the insurer refuses to pay after a loved one passes away. Step-by-step guide to appealing a denial.

Read Guide
2Y

2-Year Contestability Period

Understanding the critical two-year window when insurers can investigate and deny claims for misrepresentation.

Read Guide
?

Beneficiary Disputes

When multiple parties claim the death benefit, or when beneficiary designations are contested or unclear.

Read Guide
!

Material Misrepresentation Defense

How insurers use alleged lies on the application to rescind policies - and how to fight back.

Read Guide
AD

AD&D Claim Disputes

Accidental Death & Dismemberment claims: what counts as "accidental" and how insurers try to deny coverage.

Read Guide
C

Interpleader Actions

When the insurance company deposits the money with the court and lets claimants fight over it.

Read Guide

Key Issues in Life Insurance Disputes

The Contestability Period

During the first two years after a policy is issued, insurers can investigate the application and potentially rescind (cancel) the policy if they find material misrepresentations. After two years, the policy becomes "incontestable" - with very limited exceptions.

If your loved one passed away within the contestability period and the claim was denied, the insurer must prove that the alleged misrepresentation was both material and made with intent to deceive (in most states).

Contestability Limitations on Insurers:

  • The misrepresentation must be "material" - meaning the insurer would have charged more or declined coverage if they knew the truth
  • In many states, the insurer must prove the applicant knew the statement was false
  • Mistakes or innocent omissions are generally not grounds for rescission
  • The insurer cannot use information they knew or should have known

Material Misrepresentation

Even outside the contestability period, insurers may attempt to rescind policies based on alleged fraud. However, they face a much higher burden of proof after two years. Common allegations include undisclosed medical conditions, tobacco use, or dangerous hobbies.

Suicide Exclusions

Most life insurance policies exclude coverage for suicide within the first two years. After that period, suicide is typically covered. If an insurer claims death was suicide to avoid paying, they bear the burden of proving it was self-inflicted.

California Note

Under California Insurance Code Section 10381, after a life insurance policy has been in force for two years, it becomes incontestable except for nonpayment of premiums. This provides strong protection for California policyholders against late rescission attempts.

What To Do If Your Claim Is Denied

If a life insurance company denies a death benefit claim, take these steps:

  1. Get the denial in writing. Request a detailed explanation of why the claim was denied, including specific policy provisions and evidence relied upon.
  2. Gather documentation. Collect the policy, application, death certificate, medical records, and any correspondence with the insurer.
  3. Review the denial carefully. Identify whether the stated reason is factually accurate and legally sufficient.
  4. Check the contestability period. If the policy was in force for more than two years, the insurer's ability to rescind is severely limited.
  5. Consider the appeal process. Many policies require you to exhaust internal appeals before filing a lawsuit.
  6. Consult an attorney. Life insurance disputes often involve complex legal issues and significant amounts of money. An experienced attorney can evaluate your case and advise on the best path forward.

Time Limits Matter:

  • Statute of limitations for breach of contract claims varies by state (typically 3-6 years)
  • ERISA claims (employer-provided policies) have specific procedural requirements
  • Waiting too long can bar your claim entirely