Why do life insurance claims get denied?

Life insurance claims are most commonly rejected due to policy lapses, material misrepresentation on the application, or deaths occurring during a contestability period or from excluded activities.

Top Reasons for Claim Rejection

• Policy Lapse: If the policyholder stops paying premiums and the grace period ends, the policy becomes inactive, and the insurer will not pay out the benefit.
• Material Misrepresentation: If the insurer discovers that the applicant lied, omitted health conditions, or hid dangerous lifestyle habits (like smoking or extreme sports) during the application, they can deny the claim.
• The Contestability Period: Most policies feature a two-year contestability window. If the insured dies within this timeframe, the company thoroughly investigates the original application. Any hidden fact found during this review can void the policy.
• Excluded Causes of Death: Policies typically exclude suicide within the first two years. Deaths resulting from illegal or criminal activities are also routinely denied.
• Expired Term Policy: If the policyholder dies after a term life insurance policy expires and was never renewed or converted, there is no active coverage.
• Outdated Beneficiary Information: Failing to update a beneficiary (or if the sole beneficiary passed away with no contingent backup named) can cause severe administrative and legal delays.

For more details on handling disputes, you can read What to Do if Your Life Insurance Claim Is Denied from Policygenius. You can also review guidance provided by Aflac or legal insights from Kantor & Kantor, LLP.