What to do if a life insurance claim is denied

A denied life insurance claim is rare, but it happens. Here’s why some claims are rejected and how to appeal the decision.

Amanda Shih author photo

Amanda Shih

Published July 1, 2020

KEY TAKEAWAYS

  • The death benefit can be denied in specific circumstances, such as if the insured lied on their application

  • The insurer should provide a clear explanation for why they denied the claim

  • A state department or lawyer can help you contest the denial, but you can also appeal it on your own

It’s rare for a life insurance company to deny a life insurance claim. However, it’s not impossible. A life insurer might deny a claim during the contestability period, due to the manner of death, or because the policy lapsed without your knowledge, among other reasons.

If your claim is rejected, the insurer will likely refund the premiums paid into the policy and terminate it. But if you feel there was no basis to deny the claim, it’s possible to investigate why the death benefit was denied and challenge the insurer’s decision.

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Why life insurance claims are denied

When a provider denies your life insurance claim, expect to receive some kind of written communication — often called a denial letter — explaining their decision in detail. While the explanations can vary, there are a few common reasons why claims get denied:

  • The policy lapsed due to lack of payment
  • The policyholder lied on their application
  • The insured died by suicide within the first two to three years of the policy

Unfortunately it would be difficult to appeal these reasons for a claim denial. Life insurance policies include language that voids your coverage for non-payment or if you lie during the application process. For example, if you falsely state that you have no history of smoking, but die due to a tobacco-related illness, the insurance company won’t pay out.

Similarly, most policies include a suicide clause, which denies the death benefit if you die due to self-harm within the first two to three years of buying a policy.

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The contestability period

If someone dies for any reason within the first two years of getting their life insurance policy, their death falls into the policy’s contestability period. During this time the insurer may perform further review of a death benefit claim to check for any fraud or misrepresentations made on the application. This can delay the claims process but as long as the deceased was honest when applying, the provider will pay out the death benefit.

Homicide

In cases where the policyholder’s death has been ruled a homicide, the insurer will wait until an investigation has cleared all beneficiaries of wrongdoing before paying out the death benefit. This will delay the claims process and of course, if a beneficiary is implicated in the murder, their claim will be denied. In that case, the policy will go to the contingent beneficiary, if one was named, or a court decides to whom the death benefit goes.

What to do if a life insurance claim is denied

There’s no guarantee that you’ll be able to get the provider to pay out a denied life insurance claim. In cases where you think your claim is clearly being handled improperly, start by filing a complaint with your local department of insurance.

For cases in which a complaint would not be or has not been helpful, there are still some options for recourse.

Contact the insurer

The insurer should have clearly explained their reasoning for rejecting your claim in their initial denial letter. If they didn’t, or they provided insufficient supporting details, you can ask them for more information about their specific objections.

Make sure to ask for details on the insurer’s appeals process as well. The steps and documentation required varies by provider and the specifics of your claim. Depending on why the claim was rejected, you might need to present additional medical documentation, an autopsy report, or insurance payment receipts as evidence to support your case.

Keep in mind that some life insurance policies, like employer-sponsored group life insurance, might limit the period of time during which you can appeal the insurer’s decision.

Contest the rejection

You have a few options for appealing a denied life insurance claim. You can contest the decision on your own by following the insurer’s appeals process and presenting the evidence you’ve gathered. This comes at no cost to you but can be complex and stressful to manage while you’re grieving.

You may be able to get free help from your state’s department of insurance or attorney general. Some states employ individuals who can help you navigate the appeals process or contact the insurer on your behalf, which may give your appeal more weight.

Finally, a lawyer well-versed in life insurance law can help you contest the decision or bring a lawsuit against the insurer. Having an attorney’s backing may be enough to win your appeal without going to court. If you decide to bring a lawsuit, know that it can be costly. The final judgment might not leave you with the full death benefit, and even if it does, some may need to go toward legal fees.

About the author

Insurance Expert

Amanda Shih

Insurance Expert

Amanda Shih is an insurance editor at Policygenius in New York City. Previously, she worked in nonfiction book publishing and freelance content marketing. Amanda has a B.A. in literature and communication from New York University.

Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.