Denied Life Insurance Death Benefit Claims | What To Do

Why Life Insurance Claims Get Denied

Insurance companies deny life insurance death benefit claims for many reasons - some legitimate, many not. Understanding why your claim was denied is the first step to fighting back.

Common Denial Reasons

Material misrepresentation on the application - The insurer claims the deceased lied about health conditions, smoking, occupation, or other factors
Death during contestability period - The policy was in force for less than two years, giving the insurer broad investigation powers
Policy lapse due to non-payment - The insurer claims premiums were not paid and the policy was not in force
Suicide exclusion - Death occurred within the suicide exclusion period (typically 2 years)
Excluded cause of death - The death allegedly resulted from an excluded activity or condition
Beneficiary issues - The insurer questions who is entitled to the benefit

Important: Time Limits Apply

You have limited time to challenge a denial. Depending on your state and policy type:

ERISA claims (employer policies): 60-180 days to file administrative appeal, then limited time to sue
Individual policies: State statutes of limitations typically 3-6 years
Some policies have internal deadlines for appeals

Steps To Take After a Denial

If your life insurance claim has been denied, take these steps to protect your rights and build your case for an appeal or lawsuit.

Get the denial in writing. Request a formal denial letter that explains exactly why the claim was denied, including specific policy provisions and evidence the insurer relied upon. Do not accept a verbal denial.
Request the complete claim file. Under most state laws and ERISA, you have the right to see everything the insurer considered when denying your claim. This includes medical records, investigation reports, and internal memos.
Gather all policy documents. Collect the policy itself, the application, any amendments or riders, and all correspondence with the insurance company. The application is especially important if misrepresentation is alleged.
Obtain medical records. If the denial involves health-related misrepresentation, get the deceased's complete medical history from all providers. Compare what was disclosed on the application to actual records.
Document the timeline. Create a chronology of when the policy was purchased, when premiums were paid, when death occurred, when the claim was filed, and when it was denied.
Consult an attorney. Life insurance denials often involve significant money and complex legal issues. An experienced attorney can evaluate your case, identify weaknesses in the denial, and advise on the best path forward.

Contesting a Material Misrepresentation Denial

"Material misrepresentation" is the most common reason insurers deny life insurance claims. But this defense has significant limitations you should understand.

What the Insurer Must Prove

To successfully deny a claim based on misrepresentation, the insurer typically must prove:

The statement on the application was false
The applicant knew it was false (in most states)
The misrepresentation was "material" - meaning the insurer would have charged more, added exclusions, or declined coverage entirely
The insurer relied on the misrepresentation in issuing the policy

How to Fight Back

Challenge materiality. Even if a statement was technically false, if the insurer would have issued the same policy anyway, it may not be "material."
Argue lack of intent. Innocent mistakes, misunderstandings, or agent errors are not intentional misrepresentation.
Examine the application. Were the questions ambiguous? Did the agent fill out the application incorrectly?
Look for waiver. Did the insurer have access to medical records through MIB or other sources and issue the policy anyway?
Check the contestability period. If more than two years have passed, the insurer's ability to rescind is severely limited.

California Note

California Insurance Code Section 331 requires that a misrepresentation be made "with actual intent to deceive" or materially affect the acceptance of risk for an insurer to avoid a policy. This is a higher standard than some other states require. Additionally, under Section 10381, after two years the policy is incontestable except for nonpayment of premiums.

Special Rules for Employer-Provided Policies (ERISA)

If the life insurance policy was provided through an employer, it may be governed by ERISA (the Employee Retirement Income Security Act). ERISA claims have special rules that differ significantly from individual policy claims.

Key ERISA Differences:

You must exhaust administrative remedies (file an internal appeal) before suing
Court review is often limited to the "administrative record" - evidence considered during the appeal
Damages are typically limited to the policy benefit - no bad faith or punitive damages in most cases
Strict time limits apply to appeals and lawsuits
The case is heard in federal court, not state court

Because of these limitations, building a strong administrative appeal is critical in ERISA cases. Everything you submit during the appeal may be the only evidence the court considers later.

When to Consider a Lawsuit

If your appeal is denied or you believe the insurer acted in bad faith, you may need to file a lawsuit to recover the death benefit. Consider litigation when:

The denial is based on factually incorrect information
The insurer misinterpreted policy language
The contestability period has passed but the insurer is still denying
The insurer failed to properly investigate before denying
Appeals have been exhausted without success
The claim amount justifies the cost of litigation

In cases involving bad faith - where the insurer's conduct was unreasonable or made without proper cause - you may be entitled to damages beyond the policy limits, including attorney's fees, emotional distress, and potentially punitive damages.