INSURANCE GUIDE

The death of a loved one is hard enough, but finding out that a life insurance claim was denied can make the loss even harder. While there’s no amount of money that can ever replace the one you lost, it can certainly help to ease your worry – especially if you are financially dependent on him or her.

While most people assume that life insurance is guaranteed protection, claims can be denied. If you’ve recently lost a loved one and filed a life insurance claim, only to find that it was denied, it can certainly be unnerving. You think to yourself, “How could this happen?” and “Does the insurance provider have the right to deny the claim?”

Can Life Insurance Companies Deny Your Claim?

life insurance claim deniedWhile many people assume that they are entitled to receive a life insurance payout upon the death of a loved one, the truth is that insurance providers do have the right to deny a claim. Prior to paying out, insurance companies will extensively examine the terms of policies in order to ensure that policyholders have satisfied their obligations. If it is determined that a policyholder violated the terms of his or her policy, instead of paying out the death benefit, the life insurance carrier will refund the premiums that were paid to the estate of the deceased and pay nothing to the listed beneficiaries.

In other words, life insurance providers do reserve the right to deny a claim. Here’s a look at some of the most common reasons why life insurance claim denials happen.

The Policyholder Died during the Contestability Period

After purchasing life insurance, the policy enters what is known as a contestability period; a period of time during which insurance providers can investigate claims and deny them. In most locations, the contestability period is two years; however, it some states, the period is one year. No matter how long the contestability period is, it starts when the life insurance policy goes into effect.

If a person passes away within the contestability period, the issuer of the life insurance policy has the right to investigate the policy. During the investigation, they will assess the terms of the policy, as well as the terms of the policyholder’s death. If it is found that inaccurate information was provided, a claim can be denied. The insurance provider can deny the claim even if the policyholder’s cause of death was in no way related to the misrepresented information that he or she supplied.

For instance, if the deceased did not provide accurate information about a medical condition (had a history of cancer, for example), but the cause of his or her death had nothing to do with the condition (he or she passed away in a car accident, for example), the insurance company could still deny the claim and refuse to pay out the death benefit.

If the policyholder passed away after the contestability period and did not provide accurate information to his or her life insurance provider, generally the misrepresentation won’t be an issue. However, if the provider suspects that a life insurance policy was purchased specifically for the benefit of the beneficiaries – the individual purchased the policy and committed suicide so that his or her beneficiaries could receive the payout or if the policy was bought in a plot to murder the covered individual and collect the payout – the life insurance provider will deny the claim, even if the contestability has ended.

The Cause of Death Wasn’t Covered by the Life Insurance Policy

Life insurance policies have exclusions and these exclusions highlight causes of death that the policies will not cover. Exclusions are clearly worded by the insurance company, but at the time of a loved one’s death, it can be difficult to assess whether or not the death was not covered by a life insurance policy. Moreover, beneficiaries may not be aware that the exclusions exist and what the policy will not cover.

If the policyholder died as a result of suicide, for example, and the policy does not cover suicide (many policies will do not cover suicide), then the life insurance claim will be denied.

The Policyholder did not Disclose Pertinent Information

The most common cause of life insurance claim denials is because the policyholder did not provide information that the insurance company required to correctly determine the risk of the policy being paid out. For instance, if the policyholder had a history of driving under the influence of alcohol or drugs and died as a result of a DUI accident, the life insurance claim could be denied. Or, if the insured had a doctor offer inaccurate information for the purpose of covering up a deadly medical condition, the issuer of the policy could deny paying out a death benefit. If you are filing a claim on a missing person, you must wait for the court to declare the person legally dead, otherwise the claim will be denied.

Policy Premiums Were Not Paid

A life insurance policy is an agreement between the policyholder and the insurance company. This agreement states that the insurance company will pay out a death benefit to listed beneficiaries in exchange for receiving premium payments from the insured.

If the insured failed to maintain payments on the premiums for his or her life insurance policy, the provider could deny a claim and refuse to pay out the death benefit. Typically, there is a 30 day grace period for missed payments, and as long as the premium is paid within that grace period, the policy will still be effective; however, if the payment is not made within that time frame, the life insurance company could cancel the policy.

A Beneficiary Wasn’t Named

In order for a life insurance company to pay out a death benefit, the policyholder must name a beneficiary – the person that will receive the death benefit. If the insured failed to name a beneficiary, the life insurance claim would be denied.

If that is the case, the life insurance provider will pay the death benefit to the estate of the deceased. In order for anyone to receive the payout, the estate may have to go through probate, which can be a very time-consuming process.

What to Do When a Claim is Denied

If you filed a life insurance claim and it was denied, don’t assume that you have to accept the denial. You can contest the denial. The first thing to do would be to contact the insurance provider to discuss the decision that was made. If you can effectively prove that the insurance company’s decision to deny the claim was not warranted, the issue could be cleared up. However, if the insurance provider still denies the claim, you can take legal action.

Seeking the help of an experienced attorney can help you have the denied claim reversed. It can be hard to convince an insurance company to change their decision to deny a claim and issuers tend to take petitions more seriously when a lawyer is involved. An attorney will be able to provide the insurance company with the necessary information and understands the laws that govern life insurance payouts and denials. That’s why employing an attorney may be within your best interest if your claim has been denied.

Summing It Up – Reasons for Life Insurance Claim Denials

There are several reasons why life insurance providers may deny a claim and refuse to pay out a death benefit. If you find yourself in this situation, don’t assume that you are not entitled to the death benefit; contact the issuer of the policy, and if necessary, consult with an attorney.

38 Comments

  1. In 2013 my ex-husband and Father to our daughter passed away. He was working for Oil State and died on their property. His 401K life inc. was with Sun Like Assurance.
    This has gone for years not knowing the truth about his coverage.
    Thank You
    Rachel Tietz

    1. Hi Rachel, it is unfortunate to hear about the time you spent not knowing about his life insurance and investment accounts! You should still be able to file a claim with Sun Life Assurance, and also take ownership of his 401(K), assuming you were the named beneficiary and/or the estate passed to you.

  2. My husband died 4 months after his 65th birthday, his work insurance refused to pay out after they changed the policy last year, hes been paying into it for years. They said he was aware of it, i cannot find any evidence of this. Can i dispute it?

    1. Hi Silver Lady,
      You can always try to dispute it. Was your husband still working when he died? It’s difficult to know how successful you’ll be without knowing the details of the life insurance policy and the employment contract, so you would likely need to get a hold of those documents before starting anything.

  3. My mothers has had a life insurance policy since 1984 with automatic payments taken directly from her checking account. After her having a stroke I have taken over her affairs. I received a letter stating that the payments were not high enough to keep the policy active and the policy was now void. Is there anything legally I can do about reactivating the policy?

    1. You can ask the insurance company about reinstatement…possibly not.

      1. Hello,

        My ex husband and I always remained close. He always told me I was his beneficiary. He got pinned under a semi at his job. He lived for 3 weeks.

        It took 12 weeks to get the death certificate. The accident was the cause of death.

        I dropped off the death certificate to his job. The HR person said she sent it off. She even told I qualified for Double indemnity. It been 36 days since she supposedly sent it off.

        I have not heard anything from the life insurance carrier.

        I have tried over 40 times to contact his work’s hr dept for the life insurance carrier, policy number and phone they ignore me?

        My ex would still be alive if hadn’t been for the job.

        What’s my resources since they refuse to give it to me?

        Thank you!
        Alice

        1. The first thing I would do is to contact the life insurance company directly! The company does not need to facilitate the claim. It could be they never submitted it. If this does not get anywhere, follow up with the bureau of insurance in your State, and department of labor. Good luck!

  4. My father passed away several months after getting a life insurance for us since he retired in may he felt like it was time to have one anyways he got the insurance and about three months later he passed with a issue with his liver he never was diagnosed until end of November or December and passed at the end of December I’ve yet to hear about trulife answer and I am curious if his claim will be honored to Pay for his funeral

    1. Hi John,
      If there was no intentional concealment from your father, then the claim should eventually be paid. Since your father passed away just a few months after buying a policy, then the insurance company has the right to investigate the claim and his death in order to make sure that no fraud was committed. This process can take a few months, but as long as everything stacked up, then the company should pay the claim.

  5. Rather Notdisclose

    Can you use an ITIN to be a beneficiary? Are there any downsides if death occurs? Or is it treated as a private contract regardless of the immigrant status?

    1. From everything I’ve read there’s no legal issues with a beneficiary having an ITIN instead of a SSN. They should still be able to collect all the benefits without issues.

  6. My mother passed away September of 2018 she had told me I was a beneficiary of her life insurance I haven’t heard anything I don’t even know what company it is

    1. Hi James,
      You’ll probably need to find some type of documentation. If she had a life policy, then she probably has those documents somewhere. If there are no more documents, then you’ll have to ask around and do some investigating to find out which company she had. It’s the responsibility of the beneficiaries to file a claim, the insurance company won’t know about a death and won’t initiate a claim.

  7. My father was hiv positive and took out a policy with all life but at the time of his death he had defaulted and had TB iris and other things. I want to know if my mother can get the payout under those circumstances as she is the beneficiary

    1. Unfortunately, it does not look good. Contact the insurance company to see if they would be willing to grant an exception. Your policy itself is a contract, you can read the rules in the policy. If it is not allowed contractually, and the policy is in compliance with laws, they will not be required to pay.

  8. Our claim was denied due to the cause of death 5 years ago but we found more medical that could have an impact on changing the death certificate would it worth it trying to have the doctor change the death certificate after so long.

    1. You should contact the life insurance company to ask the question. They generally will act in good faith to advise you. You can also contact an attorney. I have never seen a case like this where the death certificate was amended so much later.

    2. Hi.. my mom passed phils as she the doc gave her 6-9mos to live and hard to take care over here. She passed away last year. Last July filed life linsurance claim and insurnace sent investigator for her death as she died of cancer. they said there’s some discrepancies on her birth cert? Does this can hinder the claims process?

      1. Discrepancies on a birth certificate can hinder the claims process if the insured lied about their age on the application. This does not mean that the claim will ultimately be denied, but most likely if the claim would have still been approved given the real age it will be paid. It may slow the process down and the potential does exist for it to ultimately lead to a denial unfortunately.

  9. My sister in law died recently but had been paying on a life insurance policy for the last 3 years . The insurance company denied the claim due to sone loose end on paper work but she received the email when she was incoherent on her death bed . What are my options ?

    1. If you think the denial is not legitimate, the best thing to do is to take it up with the bureau of insurance for your State.

  10. My mom die from cancer last week Monday . She took out a life insurance in December of 2018. I file a claim but it pending but I been told being that it haven’t been 2 years it under contest ability period . When she took out life insurance she told them her medical history of high blood pressure and past info. I had Also seen that she had a “terminal illness” in her policy . She was diagnosed with leukemia/lymphoma around August of 2019. Can they denied my claim

    1. Sure if there is a 2 year contestability period, the death is clearly within 2 years. Unfortunately for you, they have the legal and contractual rights to do this. You can always hire an attorney if you want legal advice and to possibly pursue a claim in court, but your chances may be slim.

  11. My mother passed away and I was the beneficiary but I was married at the time. Now I have my maiden name again. The insurance company was notified but now the insurance sent a letter stating that the policy is death lapse and a reject letter will be sent. What’s going on?

    1. I’m not 100% sure what you are saying when you say “the policy is death lapse”. However, they may have mishandled the paperwork that you sent them showing your name was changed back to your maiden name. If you did not send this paperwork, you definitely will need to. I would call their customer service center as soon as possible and explain the situation and be ready to submit your name change paperwork for processing. You should get the payout as long as the policy was in good standing at time of death.

  12. Hi my special needs disabled child 27 recently passed away.

    She was on my portability policy from my old job. The claim was denied.

    Why? Yes 26 is usual cutoff but my child is disabled since birth and the company health policy knew that.

    I plan to appeal.

    I read that HIPPA LAW can’t deny disabled claim.

    1. Hi Regina,
      It’s not clear what your insurance situation was. A health insurance policy wouldn’t pay for a death, you would need a life insurance policy specifically on your daughter in order to collect some type of death benefit. Health insurance will only pay for medical expenses while alive.

  13. My dad passed away January 2020 4 weeks after being diagnosed with stage 4 lung cancer. He was still making payments on a life insurance policy he got in the early 1980’s. My sister,his power of attorney inquired about the policy and was told she wasn’t a beneficiary but me and another sister are to add to confusion my deceased mom is also listed but my parents were divorced at that time. Also our beneficiary paperwork shows a different policy number for each of us. Could there be more than one policy?. Transamerica is offering very little info when we inquire about the details of the policy. What are we entitled to know.

    1. Hi Judy,
      It’s possible that there was more than one policy. Was there a will? It sounds like you should speak with an attorney that your father used and then you’ll need to speak with somebody from Transamerica who can help. You might need to talk with somebody from Transamerica in person, as calling them on a confusing situation like this might be difficult. But you’re entitled to at least turn in the claims from the policies that you have, although you aren’t entitled to know what other policies he might have had. Your power of attorney sister might be able to find that information from Transamerica.

  14. My brothers wife passed away from cancer in February of 2020. She had obtained funds from her life insurance policy due to her terminal cancer before she died, But now they are denying the claim my brother put in for the balance due saying she never filled out a contingency form?

    1. I am guessing the money went to the estate if her brother was not a named beneficiary.

  15. My brothers claim was denied on the basis that the policy expired. He had not had to pay premiums given a disability rider. There is concern over whether requirements to update the status of the disability were submitted given his poor medical condition the last four months of his death. Wife states it was updated but can not locate any proof of doing so. Policy is with a company who is # 3 on the top ten list for not paying claims. I advised her to seek legal counsel. Is the insurance company required to give us all documents relating to the polcicy and related expiration by our request or should we take the attorney route. What about contacting the comissioner of insurance ?

    1. Well, I would start with the life insurance company. They would be required to work with you and provide you documentation. If it is a major life insurance company, I can also tell you from experience that they are unlikely to take an adversarial position with you. They will do their best within the company rules to help you, in other words. I would explain the situation, and ask if you can provide retroactive proof of disability, proving that the disability started prior to the policy expiring. If you do not get anywhere, you can engage the help of an attorney. Unfortunately, if documentation was not actually provided you may not be able to get the claim paid. I wish you luck!

  16. My father had a 50% reduction scheduled to take effect the first of the month after he turned 70. He turned 70 on March 21st so the death benefit reduced by 50% on April 1st. My father had surgery to remove cancerous tissue on December 13th and was in the hospital for four months due to complications from the surgery which he ultimately succumbed to on April 12th. Since the cause of loss was complications from the surgery which was before the 50% reduction, would the death benefit be the full amount?

    1. Most likely not. It does not typically matter when the disease starts, only the date of death.

  17. Our sister died on 10JAN2020 and her life insurance policy dated 1978 indicated that her sister was the beneficiary and would get a lump sum payment and her brother was secondary beneficiary. However, it was just brought to our attention that our sister made out a Will after the fact with exact date unknown (maybe in the 90’s). Her insurance policy was evidently changed by her in 2001. That change continues with sister and brother shown as beneficiaries with the lump sum. However, in the method of settlement column, our sister evidently made a notation that reads “to be divided equally amongst all living brothers and sisters with the two of us as Executives as in the Will”. The latest Will made out in 2005 states that the two of us are joint representatives but there is nothing indicating her Life insurance Policy. We believe sister should still be considered the beneficiary and she is entitled to the lump sum benefit. After 5 months, Insurance company seems to want this turned into an estate and having more and more individual affidavits and claim forms completed by each heir to receive their payments straight from the insurance company.

    A Beneficiary Was Named
    In order for a life insurance company to payout a death benefit, the policyholder must name a beneficiary – the person that will receive the death benefit. If the insured failed to name a beneficiary, the life insurance claim would be denied. If that is the case, the life insurance provider will pay the death benefit to the estate of the deceased. In order for anyone to receive the payout, the estate may have to go through probate, which can be a very time-consuming process.

    1. Hi Roland,
      If the will and the life insurance policy say different things, then typically that doesn’t matter because the life insurance company will only pay out the benefit to whoever was listed as the beneficiary. If she made a change in 2001 to her life insurance policy, then whoever she listed as the primary beneficiaries will get the death benefit.

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