8 Reasons Why Your Life Insurance Claim May Be Denied

Reasons Why Your Life Insurance Claim May Be Denied

Life insurance is like a promise from a company to help protect your loved ones when you’re not around anymore. It’s a way to ensure they get some financial support when you’re not there to care for them.

But, sometimes, a life insurance claim may not be approved. This life insurance claim denial can add stress and hardship to your situation. A life insurance claim denial can be extremely difficult for people relying on life insurance benefits to help them handle financial hardships after the death of a loved one.

Understanding why your life insurance claim can be denied is essential to avoid being in such situations. We’ll explore some common reasons why life insurance claims might be denied in this article.

What is a Life Insurance Claim?

A life insurance claim is a request made by the beneficiaries or the policyholder’s loved ones to the insurance company to receive the death benefit after the policyholder’s passing. When the policyholder passes away, the designated beneficiaries or the policyholder’s estate can submit a formal claim to the insurance company for the financial payout, known as the death benefit.

How do I Initiate a Life Insurance Claim?

To initiate the claim process, the beneficiaries or the policyholder’s estate typically need to submit certain documents, including the death certificate, policy documents, and any required forms provided by the insurance company. The insurance company will then review the claim, validate the policy’s details, and assess whether the death is covered by the policy’s terms and conditions.

If everything is in order, the insurance company will approve the claim and pay the death benefit to the beneficiaries or the policyholder’s estate. However, if there are any discrepancies or issues with the claim, it may be denied, and the beneficiaries may not receive the death benefit.

What Are the Reasons Life Insurance Claims Are Denied?

Reasons Why Your Life insurance Claim May Be Denied

There are several reasons why a life insurance claim might be denied. Knowing these common reasons for denial can help you ensure you are paid when you lose a loved one. Some of the reasons are:

The Application Has Missing or Inaccurate Information

When someone takes out life insurance, representatives from the insurance company will ask them questions to determine if a person is eligible for a policy and, if so, how much the insurance company will charge. Many factors can affect the cost of a life insurance plan, including age, gender, health, medical history, and even driving history. The insurance company then uses the applicant’s answers to these questions to evaluate the risk of insuring them and sets the cost of the premium accordingly.

Some people may omit information from applications when taking out life insurance policies, either by accident or deliberately to lower the cost of their premium. However, doing so can cause the life insurance company to deny the claim when the insured dies. If the insured dies within two years of the policy purchase, the insurance company can investigate the claim before paying it out to ensure no “ material misrepresentation” was made in the application.

What is material misrepresentation?

The life insurance company may deny your claim if it discovers a material misrepresentation.

Material misrepresentation is when the applicant makes an allegedly untrue statement or omits important information related to the risk that would change the cost rate at which the insurance would be provided.

An example of material misrepresentation would be failing to mention any pre-existing health conditions when asked about the condition in the application. Other examples include omitting information about the insured’s drug and alcohol history or whether or not they use tobacco when asked such questions on the application.

The best way to ensure you can collect on the policy is to ensure that the application is filled out fully and honestly during the application process. If you fail to provide the requested information or put down false information, you risk having your life insurance claim denied. However, not every omission of an incorrect statement is a valid basis for denial of a claim. If the life insurance company denies a claim based on alleged misrepresentation in the application, you should contact an experienced life insurance attorney to evaluate the matter and determine if the life insurance company’s denial was propper.

Lapsed Policy or Failure to Pay on Time

Keeping up with your life insurance policy is crucial to ensure it does what it’s designed to do – protect your loved ones. But if you have a lapsed policy, it means you didn’t pay the insurance premiums on time, and your coverage stopped. Your life insurance claim may be denied if something happens to you while the policy is lapsed.

When you buy life insurance, you agree to pay a certain amount of money, called premiums, regularly. This money keeps your policy active and allows your loved one to claim it if you pass away. But, if you miss a premium payment and don’t catch up within the grace period, your policy will lapse, and your coverage ends. However, some lapses in payment can be excused under Texas law. If you have questions as to whether a denial based on a policy lapse was valid, contact an experienced life insurance attorney.

Cause of Death is Excluded on Policy

The insurance company may deny the claim if the person the life insurance policy covers dies doing an activity excluded by the policy. Texas law states that permissible life insurance exclusions include suicide, stated hazardous occupations, and aviation activities. However, not all life insurance policies exclude these factors or have language limiting them, so policyholders must review their policies to see what is specifically covered.

Some life insurance policies can exclude deaths caused by suicide and deaths caused by drug or alcohol abuse that they deem “self-inflicted.” Many life insurance policies do not cover murders, death caused by illegal activities such as speeding, death due to dangerous activities such as bungee jumping and skydiving, and death caused by acts of war.

However, most life policies sold in Texas can only exclude such deaths from coverage if the death occurs within two years of the policy being issued or renewed.

Non-Disclosure of High-Risk Activities

When you apply for life insurance, the insurance company wants to know about any activities that might affect the risk of insuring you. An insurance company will ask these questions to understand how risky it is to insure you, and your claim could be denied if you fail to mention anything important, such as high risk hobbies.

It’s essential to be honest and open during the application process. Tell the company about your risky activities, even if you think they might not approve your application- you could create a higher risk for a denied insurance claim if you fail to disclose anything important. They might still offer you a policy, but they need to know all the facts to make the right decision.

Death Occurs Within Contestability Period

Most life insurance policies have a contestability period, usually two years from the purchase date. If the insured dies before the end of the contestability period, the insurance company can investigate the claim for material misrepresentation and may contest or deny the claim if they find the application information untrue or incomplete.

Death is by Suicide and Within the Contestability Period

The life insurance claim may be denied if the policyholder takes their own life within a specific period after getting the policy (usually the first two years).

Insurance companies want to ensure that they are not taken advantage of by someone who buys a policy with the intention of causing self-harm and then their loved ones make a claim to receive the death benefit. Therefore, this clause is designed to protect the insurance company from fraudulent claims related to suicide.

Alcohol and Drug Use at the Time of Death

In some states, life insurance companies can deny the claim if the insured has alcohol or illegal drugs in their system but this generally depends on whether the substance use was related to the death or contributed somehow.

Outliving a Term Life Insurance Policy

Do you know whether your insurance policy is a whole life insurance policy or a term life insurance policy? A whole life insurance policy offers lifelong coverage, while a term life insurance policy only offers coverage for a fixed amount of time.

If the insured outlives the amount of time covered by their term life insurance policy, the policy ends. This means that if the insured dies after the end of the term limit, the life insurance company will likely deny the claim since the insured was no longer covered.

Tips for Avoiding Claim Denial


Ensuring a smooth claims process and avoiding claim denial is essential to provide financial security for your loved ones when they need it the most. Here are some simple tips to help you achieve that:

  • Be Truthful and Accurate: When applying for life insurance, provide honest and accurate information. Don’t withhold relevant details about your health, lifestyle, or activities. Being transparent ensures there are no surprises when it’s time to make a claim.
  • Review Policy Terms: Read and understand your life insurance policy thoroughly. Know what’s covered and excluded, including any waiting periods or clauses that might affect the claim process.
  • Pay Premiums on Time: Stay on top of your premium payments. Set reminders or use automatic payments to ensure you don’t miss deadlines. A lapsed policy can lead to a claim denial, so make timely payments a priority.
  • Keep Records Organized: Maintain organized records of your policy documents, premium payments, and any correspondence with the insurance company. This can help you quickly provide the necessary information when filing a claim.
  • Update Information When Necessary: If there are any changes in your life, such as a new address or a significant health event, inform your insurance company promptly. Keeping them up-to-date ensures your policy remains accurate and valid.
  • Understand Contestability Period: Be aware of the contestability period in your policy, which is usually the first two years after purchasing the policy. During this time, the insurance company can investigate claims more thoroughly. Ensure you meet all the policy requirements during this period.
  • Seek Professional Advice: If you’re unsure about any aspect of your life insurance policy or claim process, don’t hesitate to consult a licensed insurance agent or financial advisor. Their expertise can help you navigate the complexities.
  • Encourage Open Communication: Share information about your life insurance policy and location with your beneficiaries or a trusted family member. This ensures they can find the necessary documents easily when the time comes.
  • Keep Beneficiaries Informed: Inform your beneficiaries about the life insurance policy’s existence and the details they need to make a claim. Communication ensures they can act swiftly and confidently when needed.

These tips can help prevent claim denials and ensure a smoother claims process, providing you and your loved ones peace of mind. Life insurance is a valuable tool for financial protection, so take the necessary steps to make it work for you and your family.

Has Your Life Insurance Claim Been Delayed or Denied?

Insurance claim denied

Have you received notice that the life insurance company is interpleading your policy benefits with a court? If you have issues with a life insurance claim, contact The Callahan Law Firm today to speak with a Texas Life Insurance Attorney.

Our Life Insurance Lawyers have represented people with insurance disputes for over 25 years. Call us at 713-224-9000 to speak with one of our attorneys for a free case review, or fill out our contact form here so we can respond to your inquiry.

FAQs: Frequently Asked Questions

Q: What is an example of misrepresentation in life insurance?

A: An example of misrepresentation in life insurance is when the policyholder provides false or inaccurate information during the application process. For instance, it could be considered misrepresentation if the policyholder fails to disclose a pre-existing health condition, omits details about engaging in high-risk activities, or provides incorrect information about their age or lifestyle. If the insurance company discovers the misrepresentation later, they may deny a claim or cancel the policy.

Q: How do you handle rejection in insurance?

A: While it can be disheartening if your insurance claim gets rejected, but there are steps you can take to handle the situation:

  • Review the rejection letter
  • Contact the insurance company
  • Provide additional information
  • Seek professional advice
  • File an appeal

Q: What is the time limit for death claims in life insurance?

A: The time limit for filing a death claim in life insurance is usually stated in the policy’s terms and conditions and you should check your specific policy for the exact time frame.

In many cases, life insurance companies require the beneficiaries or the policyholder’s estate to file the death claim within a certain number of years after the policyholder’s passing. Filing the claim within the designated time frame is essential to ensure the smooth processing of the claim and to avoid potential complications.