What to do if a life insurance claim is denied

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

It’s unusual for a life insurance company to deny a life insurance claim. However, it’s not impossible. A life insurer might deny a death benefit claim if the policyholder died 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. The insurer will also typically identify why the death benefit is being withheld, but generally, you'll need to explore legal action to contest a denial.

KEY TAKEAWAYS

  • The death benefit can be denied in specific circumstances, like 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

Why life insurance claims are denied

If 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. "If someone's claim is denied, there’s going to be a very clear reason why they were denied," says Jake Herskovits, a senior sales associate at Policygenius. "Maybe they’re not the beneficiary that’s listed or the person died by suicide in the first two years." Beyond that, Herskovits says, it's unlikely you'll ever see a claim denied.

Some additional scenarios where you might face denial are:

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 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. The exact time period ranges depending on the insurance company and 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 a 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.

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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. If the policyholder was dishonest or died by self-harm in the first few years of their policy, it's unlikely you'll be able to appeal the decision at all. 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 has not been helpful, or if filing a complaint doesn’t make sense (for example, if your claim was denied for some reason other than material misrepresentation or a contestability period issue), 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 insurance company’s appeals process as well. They can share whether it's possible to appeal the decision by providing additional documentation for the specifics of your claim. Depending on why the claim was rejected, you might need to present additional medical documentation, an autopsy report, or proof of insurance premium payments 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 if your insurer has an appeals process by 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 file 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.

It’s unfortunate when you were expecting a death benefit payout and are denied by the insurer. However, life insurance claims are different from other types of insurance claims (such as home, medical, or auto) where there’s a high chance of denial due to your policies terms and conditions. Life insurance claims are seldom denied and usually have a clear explanation.

We don’t recommend contesting a denied claim except in extenuating circumstances where you have outstanding evidence. If a life insurance company has denied your claim due to a policy lapse for example, you’d need to provide solid proof of premium payments to win an appeal. Otherwise, contesting a life insurance claim denial is not worth the time or effort.

If you still have questions about life insurance claims, a Policygenius agent can help.

Life insurance claim denial FAQs

Why would a life insurance claim be rejected?

If the policy lapsed or the policyholder lied on their application, the death benefit won’t pay out when they die. The same is true if the cause of death is suicide within the first few years of the policy or if the beneficiary claiming the death benefit murdered the policyholder. In the latter situation, the benefit would go to any contingent beneficiaries instead.

How often do life insurance companies deny death benefit claims?

It’s rare that a death benefit claim is denied. Life insurance policies cover almost all death scenarios due to an illness, accident, or natural causes. If the policyholder was honest on the application and paid their premiums on time, it’s unlikely there will be any issues during the claims process.

Can you appeal a life insurance claim denial?

If you think your death benefit claim was wrongfully denied by the insurance company, you can contest it by gathering evidence and contacting the insurer directly. If that doesn’t work or if you still have outstanding issues, you can contact your state’s department of insurance for free help or hire a lawyer.

Life Insurance Expert

Amanda Shih

Life Insurance Expert

Expertise
Amanda Shih is a life insurance editor at Policygenius in New York City. She has a passion for making complex topics relatable and understandable, and has been writing about insurance since 2017 with specialities in life insurance cost and policy types. She's previously written for Jetty and LegalZoom.

Education
Amanda has a B.A. in literature and communication from New York University.

Insurance Expert

Rebecca Shoenthal

Insurance Expert

Rebecca Shoenthal is an insurance editor at Policygenius in New York City. Previously, she worked as a nonfiction book editor. She has a B.A. in Media and Journalism from the University of North Carolina at Chapel Hill.