What To Do If A Life Insurance Claim Is Denied

    Reasons For Denial & How To Contest Them

    A life insurance policy helps to secure your loved ones financially after your death. Unfortunately, these legally binding contracts don’t guarantee protection. An insurance company can withhold the death benefit from your beneficiary under specific circumstances. 

    The policyholder’s manner of death, a policy lapse, and lack of information are a few common reasons an insurance company might withhold the death benefit. The good news is there are a few ways your loved one can contest the denial of a claim. 

    In this guide, you’ll learn why life insurance companies reject claims and what you can do about it.

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    Why Life Insurance Claims Get Denied

    Before distributing the lump sum benefit, your insurance company will make sure that you’ve fulfilled every obligation on your contract. If they find that you violated the terms of your life insurance policy, they can deny a claim.

    Your insurance provider will deliver a denial letter to your beneficiary outlining the reasons for rejection. Here are a few circumstances under which your life insurance claim may be denied. 

    The Policyholder Died During The Contestability Period 

    The contestability period pertains to the first two years that your policy becomes active. During these two years, your provider will review your life insurance application and note any discrepancies. 

    If policyholders die within this period, the insurance company launches an investigation. If the analysis finds that the policyholder was dishonest in their application, insurance providers can refuse to pay the death benefit claim. 

    Another reason a claim might be denied or delayed is the policyholder’s cause of death. If the type of death wasn’t covered by your specific insurance policy, an insurer could reject the claim. 

    The Policyholder Failed To Pay Their Premiums 

    If you miss your premium payments, you run the risk of a policy lapse. Depending on the insurance company you work with, your policy may be terminated and claims denied after one missed payment.

    Fortunately, many life insurance companies offer a grace period. During this period, policyholders can make up their late payments before the policy lapses. How long this grace period is will depend on which state you reside in, though most will last roughly 30 days. 

    It is common practice for a life insurance company to deliver a premium-due notice to policyholders. If the insured was not explicitly notified about their impending lapse, the beneficiary could contest a denial claim. 

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    The Policyholder Lied About Or Omitted Information

    Most life insurance claim denials occur because a policyholder omits or lies about pertinent information. This information might include a health condition or a risky occupation that might affect a policyholder’s policy terms. 

    For instance, applicants might lie about their income to secure a higher death benefit or lie about their smoking habits to achieve a better health classification. These untrue statements are referred to as material misrepresentations. 

    Other types of misrepresentation might include:

    • Failure to disclose medical conditions and existing treatment plans or medications
    • Omitting a risky occupation or dangerous habits
    • Leaving out a history of alcohol or drug abuse

    Even if the death had nothing to do with the undisclosed information, life insurance companies can withhold the death benefit payout if they discover evidence of misrepresentation. 

    The Policyholder Did Not Name A Beneficiary

    A life insurance policyholder must designate a beneficiary to receive the death benefits. If you forget to do so, a life insurance company will deny any claims and direct the death benefit to your estate instead. Other circumstances in which a payout will go to your estate is if you do not name a second beneficiary and your primary beneficiary dies. 

    For a family member to petition to receive the payout, the estate will have to undergo probate. During the probate period, the court must rule on the distribution of assets according to your will. If you haven’t drafted a will, the probate process can become even more time-consuming. 

    Policy Exclusions You Should Know About

    Most life insurance policies will list a few exclusions in which insurance companies can deny a claim. These include:

    Suicide Clauses 

    A typical life insurance policy will enforce a suicide clause. This clause states that a life insurance policy cannot release the payout if the policyholder commits suicide within the contestability period. 

    For most life insurance policies, this period lasts between one and two years. Because roughly 800,000 individuals commit suicide each year, life insurance companies use this period to discourage applicants from taking their life to benefit someone else financially. 

    Suppose the individual does commit suicide within the first two years of their policy becoming active. In that case, their beneficiary can still receive a refund if the policyholder paid their premiums while alive. 

    Risky Hobbies & Occupations

    Insurance carriers use information such as your occupation and extracurricular activities to determine your risk factors. For example, an insurer might deem you high-risk if you engage in dangerous hobbies such as scuba diving, race car driving, or skydiving. 

    Similarly, high-risk jobs include law enforcement, construction, aviation, and firefighting, among other things. Your beneficiary may have their life insurance claim denied if you died as a result of dangerous activities.

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    Illegal Activities

    Dying while performing an illegal activity is among the most common insurance claim exclusions. These unlawful activities go beyond drug or alcohol abuse. For instance, if a policyholder dies in a vehicular accident they caused a beneficiary who makes a life insurance claim may be denied.


    In the event of a homicide, an insurer must first investigate before releasing the insurance coverage. During this investigation, the insurer will clear beneficiaries of any wrongdoing – alternatively, the beneficiary might be indicted for murder. 

    If the primary beneficiary gets convicted of homicide, the life insurance claim goes to a secondary or contingent beneficiary. If there is no named beneficiary, the local court decides how to distribute the death benefits. 

    How To Handle A Denied Claim

    There is no guarantee that an insurer will release the payout. There are many reasons beneficiaries won’t receive the payout, such as:

    • If the policyholder was dishonest in their life insurance application
    • If the policyholder allowed the policy to lapse by not paying premiums
    • If the policyholder’s death falls under one of the excluded clauses
    • If the policyholder died by suicide within the first two years of enforcing their policy

    However, there are a few reasonable actions family members can consider. 

    Contact Your Life Insurance Provider

    A denial letter should clearly enumerate the reasons why a claim is denied. If not, you can request more information regarding your insurer’s decision for denial. 

    Ensure that you study their appeals process beforehand and prepare any additional documentation. In some cases, you or your beneficiary will have to present medical or autopsy reports. 

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    Make An Appeal For A Denied Insurance Claim 

    You can contest a rejection on your own, with the help of your state’s department of insurance, or with a lawyer. While self-representation is free, the process can become emotionally taxing and difficult to understand.

    Instead, you might consider working with a qualified attorney with experience in insurance law. In the best-case scenario, these lawyers can help you win your appeal without having to appear in court. With the right documentation and evidence, contesting the denial may be worth hiring a licensed attorney. 

    Keep in mind that if you are part of a group life insurance policy, you may only have a 60-day window to appeal a denied life insurance claim. 

    How To Prevent A Claim Denial 

    The best way to secure your beneficiaries’ death benefit is to prevent life insurance claims denial from happening. Here are a few best practices for ensuring a payout. 

    Pay Your Premiums On Time

    The best way to prevent a policy lapse and denial of your life insurance claims is to pay your premiums on time. You should also get the right policy and coverage amount. When you purchase only what you can afford, your repayments become more manageable.

    If you’re a part of the 52% of Americans who believe life insurance premiums are too expensive, consider taking out a term or simple insurance policy. Pay your premiums on a bi-annual or annual scheme if monthly repayments are too tricky for you. 

    Understand & Review Your Policy 

    As mentioned above, most policies enumerate payout exclusions in which you might be denied life insurance claims. These exclusions range from suicide clauses to dangerous and illegal activities. Ensure that the conditions on your policy are clear to you. If not, discuss with your insurance agent the conditions in which a company may reject your claims. 

    Get An Attorney

    For first-time applicants, life insurance policies can be challenging to understand. Instead of second-guessing your policy, consider working with an insurance lawyer. These experienced professionals can provide you with sufficient information about the application and claims processes. 

    In Conclusion

    Denied life insurance claims don’t happen frequently, but they can happen. Common reasons life insurers might deny your claim are:

    • Dying within the contestability period
    • Suspicious manners of death such as suicide or while committing an illegal act
    • A policy lapse due to missed premium repayments
    • Choosing not to name a beneficiary

    Fortunately, there are ways for your beneficiaries to receive the payout if their claim is rejected. By speaking directly to your insurer, contesting a decision, and working with a qualified attorney, your beneficiaries can receive the payout. 

    Was your life insurance claim denied? Our expert consultants at Wesley Insurance, LLC can help! Visit our website to learn more information on life insurance claim denials and how to handle them. 

    Written By Cameron McDowell
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