Material Misrepresentation Defense in Life Insurance Claims

What Is Material Misrepresentation?

Material misrepresentation is one of the most common reasons life insurance companies deny death benefit claims. The insurer claims that the person who died (the insured) lied or omitted important information on their insurance application, and uses this as grounds to deny the claim or rescind (cancel) the policy entirely.

For a misrepresentation to be "material," it must have been significant enough that the insurer would have made a different decision about issuing the policy - either by denying coverage, charging higher premiums, or excluding certain conditions. Not every inaccuracy on an application is material.

Common Examples of Alleged Misrepresentations

• Medical history: Failure to disclose previous diagnoses, hospitalizations, or treatments
• Prescription medications: Not listing medications that were prescribed
• Tobacco use: Claiming to be a non-smoker when the insured used tobacco products
• Alcohol or drug use: Understating substance use history
• Family medical history: Not disclosing family history of certain conditions
• Hazardous activities: Failing to mention high-risk hobbies or occupations
• Previous insurance: Not disclosing prior applications or denials

The Contestability Period: Your Key Protection

Life insurance policies have a "contestability period" - typically two years from the policy's effective date. During this period, the insurer can investigate and potentially deny claims based on application misrepresentations. After the contestability period expires, the insurer's ability to deny claims based on misrepresentation is severely limited.

What Happens During Contestability

If a death occurs within the contestability period, expect the insurer to investigate. They will:

• Order the deceased's medical records from doctors, hospitals, and pharmacies
• Review the original application for any inconsistencies
• Look for evidence of undisclosed conditions, treatments, or risk factors
• Interview family members, beneficiaries, or the deceased's physician

Fighting a Misrepresentation Denial

If your life insurance claim has been denied based on alleged misrepresentation, you have options. Many such denials can be successfully challenged.

Step 1: Get the Full Denial in Writing

Request a detailed written explanation of exactly what misrepresentation the insurer is alleging. They should identify the specific application question, the answer given, and what information they believe was withheld or false.

Step 2: Review the Original Application

Obtain a copy of the original insurance application. Examine exactly what questions were asked and how they were answered. Sometimes insurers mischaracterize what was disclosed, or the questions were ambiguous.

Step 3: Gather Medical Evidence

Collect the deceased's medical records to understand what conditions they actually had and when they were diagnosed. Key questions include:

• Was the condition actually diagnosed before the application date?
• Did the deceased know about the condition at application time?
• Was the condition mentioned by a different name or in a different context?
• Is the insurer's characterization of the medical history accurate?

Step 4: Challenge Materiality

Even if information was technically incorrect, it may not have been material. Argue that:

• The undisclosed condition had no bearing on the cause of death
• The insurer would have issued the policy anyway (perhaps at a different rate)
• Similar applicants with the disclosed condition are regularly insured
• The omission was innocent and the applicant didn't understand the question

Step 5: Check the Contestability Period

Verify when the policy was issued and when the death occurred. If the contestability period has passed, the insurer's ability to deny based on misrepresentation is limited. In most states, they can only deny for fraud with intent to deceive after contestability expires.

Common Insurer Tactics in Misrepresentation Cases

Overly Broad Medical Record Requests

Insurers may fish through years of medical records looking for anything that could be characterized as undisclosed. A minor visit years ago may be spun into a "failure to disclose a pre-existing condition."

Mischaracterizing Medical Records

Sometimes insurers misread or overstate what medical records show. A notation that the patient "reported occasional headaches" might be characterized as an undisclosed "neurological condition."

Claiming "Should Have Known"

Insurers may argue the deceased "should have known" about a condition even if they were never formally diagnosed. This is often a weak argument, as you cannot disclose what you don't know.

Rescission vs. Denial

Watch whether the insurer is denying the claim or rescinding (canceling) the entire policy. In rescission, they typically return the premiums paid and act as if the policy never existed. This has different legal implications than a simple claim denial.

When to Seek Legal Help

Misrepresentation denials are often contestable, but they require careful legal analysis. Consider consulting an attorney if:

• The claim involves a significant death benefit ($50,000+)
• The insurer has rescinded the policy entirely
• You believe the misrepresentation allegation is false or exaggerated
• The death occurred after the contestability period
• The alleged undisclosed condition is unrelated to the cause of death
• The insurer is being unresponsive or providing vague explanations

Many attorneys who handle life insurance denials work on contingency (they only get paid if you win), so the financial risk to you may be minimal.

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