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 a 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 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.

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 payout 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 payout the death benefit. Typically, there is a 30 day grace period for missed payments, and as long as the premium is paid within that grade 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 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.

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

There are several reasons why life insurance providers may deny a claim and refuse to payout 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.


  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.

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