You paid for life insurance to protect your loved ones, but not every claim gets paid.
Between 10% and 20% of life insurance claims are denied, leaving some beneficiaries wondering whether the insurance company actually had a valid reason to withhold the death benefit.
Some claims are denied for legitimate reasons. Others may involve an insurer applying policy language too broadly, relying on an application mistake, or failing to account for important facts.
Over the years, ourlife insurance lawyers have helped families across the country challenge denied life insurance claims and recover benefits even after an insurer initially refused payment.
Here are 15 common reasons life insurance claims get denied—and what beneficiaries should know when they do.
1. The Policy Lapsed or Expired
If premiums weren’t paid, the policy may have lapsed. If it was a term life insurance policy, the coverage may also have simply expired before the insured died.
But a lapse does not always mean a beneficiary has no options.
Depending on the policy and applicable law, questions may arise about:
- Whether the required lapse notices were properly provided
- Whether the insured was still within a grace period
- Whether premium payments were mishandled
- Whether an employer stopped maintaining group coverage
- Whether the insured qualified for a waiver of premium
We’ve handled cases where beneficiaries were able to challenge a denial involving a lapsed life insurance policy because the circumstances surrounding the lapse mattered.
A lapse denial should be reviewed before you assume the claim is over.
2. Death Occurred During the Contestability Period
Most life insurance policies contain a contestability period, commonly lasting for the first two years after coverage begins.
During this period, the insurance company may investigate the claim more closely and review the insured’s application, medical history, lifestyle information, and other records.
That additional scrutiny does not automatically make a denial valid.
If the insurer claims it found inaccurate or incomplete information, the facts surrounding the alleged error may matter significantly.
Learn more about what happens when someone dies during the life insurance contestability period.
3. Misrepresentation or Application Errors
Insurance companies may deny a claim when they believe the insured gave inaccurate or incomplete information when applying for coverage.
Common disputes involve information about:
- Health conditions
- Prescription medications
- Tobacco or alcohol use
- Lifestyle factors
- Occupation
- Foreign travel
- Other information used during underwriting
But an incorrect answer does not necessarily mean the insured intentionally committed fraud.
Sometimes an applicant misunderstood a question. In other cases, an insurance agent may have completed the application incorrectly or failed to record the applicant’s answer accurately.
If your claim involves alleged application errors or misrepresentation, the application itself and the circumstances surrounding how it was completed should be carefully reviewed.
4. Employer or Administrative Mistakes
Employer-sponsored life insurance can create another layer of complexity.
An employer or plan administrator may fail to:
- Properly process a waiver of premium
- Notify an employee that coverage is ending
- Explain conversion rights
- Submit required documents
- Continue premiums when required
- Properly administer a group benefit plan
Many employer-sponsored benefit plans are governed by the Employee Retirement Income Security Act (ERISA).
ERISA establishes rules governing many employer-sponsored benefit plans and gives participants and beneficiaries important rights when benefits are denied.
If the denied policy came through work, an experienced ERISA attorney can review whether mistakes by the employer, plan administrator, or insurer affected the claim.
5. Beneficiary Disputes or Errors
Sometimes the insurance company isn’t disputing whether the policy existed. The issue is who should receive the money.
Problems can arise when:
- No beneficiary was named
- The named beneficiary died before the policyholder
- Beneficiary information was never updated
- A former spouse remains listed
- A beneficiary was changed shortly before death
- Someone alleges fraud, coercion, or incapacity
- Multiple people claim the same death benefit
- A beneficiary designation conflicts with other legal documents
These disputes can lead the insurer to delay payment or initiate an interpleader action so a court can determine who is legally entitled to the proceeds.
6. Suicide Within the Exclusion Period
Many life insurance policies include a suicide exclusion that applies during an initial period after the policy is issued, commonly two years.
If the insured dies by suicide during the applicable exclusion period, the death benefit may not be payable under the terms of the policy.
The dispute becomes more complicated when the cause or intent behind the death is unclear.
Deaths involving overdoses, unusual accidents, self-inflicted injuries, or other ambiguous circumstances may lead an insurer to characterize the death differently than the beneficiary believes the evidence supports.
Whether the exclusion actually applies will depend on the specific policy language, available evidence, and governing law.
7. Deaths Involving Drugs, Alcohol, or Illegal Activity
Some policies—particularly accidental death policies—contain exclusions involving drugs, alcohol, intoxication, or illegal activity.
But the presence of drugs or alcohol does not necessarily answer every coverage question.
For example, an insurer may argue that a death was excluded because of intoxication or drug use while the beneficiary believes the death was accidental and still falls within the policy’s coverage.
These cases often turn on the exact exclusion language and the circumstances surrounding the death.
Our attorneys also handle denied accidental death and dismemberment claims involving disputes over how an accidental death is classified.
8. High-Risk or Excluded Activities
Policies may contain exclusions related to activities the insurer considers unusually dangerous.
Depending on the policy, examples may include:
- Aviation
- Auto racing
- Extreme sports
- Mountain climbing
- Certain water activities
- Other hazardous recreational activities
The important question is not simply whether an activity sounds dangerous.
The issue is whether the policy actually excludes the circumstances surrounding the insured’s death.
If an insurer stretches an exclusion beyond what the policy says, the denial may warrant further review.
9. Acts of War or Terrorism
Some life insurance or accidental death policies contain exclusions involving acts of war, armed conflict, or terrorism.
These issues may be especially important for military members, journalists, contractors, aid workers, or people living or working overseas.
Whether the exclusion applies depends heavily on the wording of the policy and the circumstances of the death.
10. Homicide or Beneficiary Involvement
When a beneficiary is suspected of causing or contributing to the insured’s death, the insurer may delay payment while the circumstances are investigated.
Under laws commonly referred to as slayer statutes or the Slayer Rule, someone who unlawfully causes the insured’s death generally cannot benefit from that wrongdoing.
But simply being investigated or identified as a person of interest does not automatically resolve who should receive the proceeds.
If the primary beneficiary is legally disqualified, a contingent beneficiary or the insured’s estate may still have a claim to the benefits, depending on the policy and applicable law.
11. Death Abroad or in a Restricted Country
A death outside the United States can result in additional investigation and documentation requirements.
The insurer may want to verify:
- The identity of the insured
- The official cause of death
- Foreign medical records
- Local death certificates
- Police or governmental records
- Whether any policy exclusion applies
Some policies may also contain restrictions or exclusions related to particular types of foreign travel or residence.
A foreign death can delay a claim without necessarily making the claim invalid.
12. No Insurable Interest or Fraudulent Policy Ownership
Life insurance policies generally must satisfy insurable-interest requirements when coverage is obtained.
Problems can arise when a policy was purchased as part of an arrangement in which the person obtaining or financing coverage had no legitimate insurable interest in the insured.
These disputes may involve so-called Stranger-Originated Life Insurance (STOLI) arrangements or allegations that a policy was procured primarily as an investment rather than legitimate insurance protection.
Because ownership, beneficiary designation, policy procurement, and state law can all matter, these cases can become highly complex.
13. Administrative Delays or Missing Paperwork
Not every unpaid claim has formally been denied.
Sometimes the insurance company simply keeps delaying.
A claim may be held up because of:
- Missing claim forms
- An incomplete death certificate
- Requests for medical records
- Questions about the beneficiary
- A contestability investigation
- Missing policy information
- Administrative problems within the insurer
Processing rules and deadlines vary depending on the policy and applicable state or federal law.
However, a prolonged delay without a clear explanation may deserve closer scrutiny.
If you’re still in the initial process, our guide to the life insurance claims process after a death explains the basic steps beneficiaries can expect.
14. Fine-Print Policy Exclusions
Insurance policies contain exclusions defining circumstances the insurer says are not covered.
The scope of those exclusions varies substantially between policies.
A denial may therefore depend on questions such as:
- What does the exclusion actually say?
- Does it apply to this specific cause of death?
- Is the language ambiguous?
- Is the insurer interpreting the provision too broadly?
- Does applicable law restrict how the exclusion can be enforced?
Never assume the insurer’s interpretation of the fine print is automatically correct.
A life insurance attorney can review the actual policy language and determine whether the exclusion applies to your situation.
15. Bad Faith Denials or Delay Tactics
Finally, some disputes involve more than a disagreement about coverage.
An insurance company’s handling of a claim may raise concerns when it:
- Delays an investigation without adequate explanation
- Misrepresents policy language
- Ignores relevant evidence
- Fails to adequately investigate the claim
- Changes its reasoning for denying benefits
- Retroactively disputes coverage after a claim is submitted
Whether conduct legally qualifies as insurance bad faith depends on the applicable law and facts of the individual case.
But beneficiaries do not have to simply accept unexplained delays or unsupported denial letters without asking questions.
16. Policy Was Included in A Trust or Will
A life insurance claim can be disputed when a trust or will names someone different from the beneficiary listed on the policy.
In most cases, the beneficiary designation on the life insurance policy controls who receives the death benefit, but trusts, estate-planning documents, divorce agreements, or conflicting beneficiary forms can create questions about who is legally entitled to the proceeds.
If the policy names a trust for a minor child or a special-needs child as beneficiary, the policy pays out to that trust.
17. New or Replacement Policy
Replacing an older life insurance policy with a new one can create unexpected claim issues if the new policy includes different exclusions or coverage terms.
A replacement policy may also restart the contestability period, giving the insurer another opportunity to review the application and investigate any inaccurate or incomplete information before paying the claim.
What Should You Do If Your Life Insurance Claim Is Denied?
If an insurer refuses to pay the death benefit, do not assume the denial letter is the end of the process.
Start by taking these steps:
- Get the denial in writing. You need to understand exactly why the insurer says the claim is not covered.
- Request the policy and relevant records. Gather the policy, application, premium history, correspondence, claim documents, and any records connected to the insurer’s reasoning.
- Be careful before handling an appeal alone. What you submit during an appeal can become important later, particularly in ERISA cases.
- Have the denial reviewed by a life insurance attorney. An attorney can compare the insurer’s explanation against the policy, evidence, and applicable law.
- Act promptly. Appeal periods, contractual limitations, statutes of limitation, and ERISA deadlines may restrict how long you have to challenge a decision.
Our attorneys can take over the appeals process, investigate why the insurer denied the claim, and determine what evidence may help challenge its decision.
How Can You Reduce the Risk of Future Life Insurance Claim Problems?
Policyholders can also take steps during their lifetime to reduce the risk of problems for their beneficiaries.
Consider these precautions:
- Keep premium payments current. Automatic payments can reduce the chance of an accidental lapse.
- Review beneficiary designations regularly. Update them after marriages, divorces, deaths, births, or other major life changes.
- Answer application questions completely and accurately. When an agent completes the application, review every answer before signing.
- Review the policy periodically. Make sure you understand the coverage, exclusions, term dates, and any riders.
- Pay close attention to employer-sponsored coverage. If employment ends, disability occurs, or benefits change, determine whether conversion or waiver rights may apply.
Was Your Life Insurance Claim Denied?
You don’t have to take the insurance company’s word for it.
For more than 20 years, we have represented beneficiaries challenging denied and delayed life insurance benefits and has recovered substantial compensation for clients across the country. You can review some of the firm’s results for life insurance beneficiaries to learn more about the types of claims the firm has handled.
If your life insurance claim was denied, delayed, or disputed, contact us for a free case evaluation.
There is no fee unless we recover benefits for you.