What to do if a life insurance claim is denied

It’s rare for insurers to deny life insurance claims, but it can happen. Here’s why some claims are rejected and how to appeal the decision.

Amanda Shih author photoRebecca Shoenthal author photo

Updated February 17, 2021|4 min read

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Editorial disclosure

It’s unusual for a life insurance company to deny a life insurance claim. However, it’s not impossible. A life insurer might deny the death benefit if the policyholder misrepresented information on their application, 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 refund the premiums paid into the policy and terminate it. The insurer should identify why the death benefit was withheld, but it’s unlikely they’ll reverse their decision unless there’s been a legitimate error. 

KEY TAKEAWAYS

  • Death benefits are denied only in specific circumstances, like if the insured lied on their application

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

  • It’s not worth contesting a denial unless you have evidence that there’s been an error

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

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 violated any clauses in their insurance policy contract, the insurer is in the right, and it’s not worth trying to appeal.

Start by contacting the insurance company to ask for more information about your claim. If, after speaking with an insurance agent, you still feel your claim has been handled improperly, you could consider filing a complaint with your local department of insurance. 

Contact the insurer

Your insurance provider can share additional details about why they rejected your claim and give you insights on their appeals process. Depending on why the claim was rejected, you might need to present medical documents, an autopsy report, or proof of insurance premium payments to support your case.

An insurance agent can tell you what’s needed for your circumstances.

Contest the rejection

If you feel you have a solid case and want to appeal your denied life insurance claim, you can:

Each option has its advantages and disadvantages. Working with the provider directly can be complex and stressful while you’re grieving, but may be the most efficient and affordable option. Contacting government agencies may give your appeal more weight, but could take time to produce results.

If you decide to file a lawsuit over a denied claim it can be costly, and the final judgment may not grant you the full insurance benefit. However, some lawyers may be able to help you file an appeal without involving a lawsuit.

When are life insurance claims 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:

If your claim is denied for any of the reasons above, you won’t have much success appealing the provider’s decision. Life insurance policies include language that voids your coverage for non-payment or if you lie during the application process. 

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 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. 

If you deny having any risky hobbies but the provider discovers that you hid the fact that you’re an amateur pilot, they can deny a claim even if your death had nothing to do with flying. A contestability review can delay the claims process but as long as the deceased was honest, 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 if a beneficiary is implicated in the murder, their claim will be denied. In that case, the payout goes to the contingent beneficiary, if one was named, or a court decides who gets the death benefit.

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It’s natural to feel some anxiety that your death claim could be denied. However, life insurance claims are different from home, health, or auto insurance claims, where there’s a higher chance of denial based on your policy terms. Life insurance claims are seldom denied and any rejections come with 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.

Still have questions about life insurance claims? A Policygenius agent can help.

Life insurance claim denial FAQ:

Why would a life insurance claim be denied?

A death claim can be rejected if the policy lapsed, the policyholder lied on their application, if the cause of death is suicide within the first few years of the policy, or if the beneficiary murdered the policyholder.

How often do life insurance companies deny claims?

It’s rare for death benefit claims to be denied. If the policyholder was honest on the application and paid their premiums on time, there should be no issues.

Can I dispute a life insurance claim denial?

If you think your death benefit claim was wrongfully denied by the insurance company, you can contest it directly with the provider or work with your state insurance department or a lawyer to contest the rejection.