It’s very rare for a life insurance company to deny a policy claim — at the end of 2021, only 0.02% of life insurance payouts were reportedly delayed or denied. [1] However, it’s not impossible. An insurer might deny the death benefit if the policyholder missed payments for their coverage or if the cause of death was excluded from their policy, among other reasons.
If your claim is rejected, the life insurance policy becomes void and the insurer can refund the premiums paid by the policyholder. You can appeal the denial by contacting the insurance company.
Key Takeaways
Life insurance claims can be denied based on exclusions outlined in the policy, or in cases of insurance fraud.
The insurer will provide a clear explanation of why they denied the claim.
It’s typically not worth contesting a denial unless you have evidence that there’s been an error.
Your state insurance department or a lawyer can help you contest the denial, but you can also appeal it on your own.
Why do life insurance claims get denied?
Life insurance companies deny claims if the insured:
Died by suicide: Insurers won’t pay out for death caused by self-harm while the suicide clause is in effect (usually the first two years of a policy, also called the contestability period).
Died doing an excluded activity: Policies won’t cover certain causes of death, such as death while committing a crime or any other activity explicitly excluded in their policy. For example, some policies have an aviation exclusion, meaning the death benefit won’t get paid if the person insured dies while piloting a plane.
Lied on their application: The benefit could be reduced or completely denied if any information was intentionally misrepresented on the application.
Stopped paying their premiums: if you miss one premium payment, most insurance companies have a 30-day grace period. But if you miss multiple payments, your policy will be canceled.
“If someone’s claim is denied, there’s going to be a very clear reason why,” says Jake Herskovits, a life insurance sales specialist at Policygenius. “Maybe they’re not the beneficiary that’s listed, or the [insured] person died by suicide in the first two years [of the policy].”
Beyond that, Herskovits says, it’s unlikely you’ll ever have a claim denied.
If your claim is denied for any of the reasons above, you won’t have much success appealing the insurer’s decision. Life insurance policies include language that voids your coverage for non-payment or for dishonesty during the application process.
→ Learn more about when life insurance companies won’t pay out
How to appeal a life insurance claim rejection/denial
When an insurance company denies a life insurance claim, the beneficiary of the policy will get a written notice with an explanation of the decision. If you think your claim was wrongly denied, start with a call to the insurance company.
Contact the insurer
The insurance company can answer questions about your claim, tell you what paperwork you need, and explain their appeals process. You’ll usually need to present proof to support your appeal, which may include:
Autopsy report
Medical documents
Proof of premium payments
Appeal the rejection
If you feel you have a solid case and want to appeal your denied life insurance claim, you can:
Contest the decision with the insurer directly. This option is the most affordable, but can be stressful to navigate.
Get free help from your state department of insurance or attorney general. This method will give your appeal more weight, but can take longer.
Hire a lawyer to make your appeal or prepare a lawsuit. This will be more costly, but more efficient.
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How to protect your beneficiaries from a claim denial
If you or a loved one has an active life insurance policy, there are a few things you can do to ensure the claims process will go smoothly if you pass away.
Automate your payments: Set your premiums to be paid automatically so you never have to worry about missing a bill and losing your coverage.
Be honest on your application: Don’t conceal any information, including health conditions or risky hobbies,when you’re buying your policy.
Keep your policy up-to-date: Update your beneficiaries after major life events and make sure that their contact information is correct.
Share your plans: Your beneficiaries should know that you have life insurance, where to find the policy and other paperwork they’ll need, and how to file a claim.
Most people don’t have to worry about their insurance company denying their beneficiary the payout money.
If your claim is denied, make sure you can prove that there was an error on the insurer’s part before trying to appeal. Otherwise, contesting a rejection won’t be worth the time or effort.
Frequently asked questions
Why are life insurance claims denied?
A claim can be rejected if the policyholder had stopped paying premiums, lied on their application, died by suicide within the first few years of the policy during the contestability period, or died while committing a crime.
How often do life insurance companies deny claims?
Insurance companies deny claims less than 1% of the time according to the American Council of Life Insurers. If the policyholder was honest on the application and paid their premiums on time, it’s highly unlikely their beneficiary will have issues filing a claim.
Can I dispute a life insurance claim denial?
You can appeal directly with the insurer. You’ll have the most success if you have proof that there was a mistake.
Policygenius uses external sources, including government data, industry studies, and reputable news organizations to supplement proprietary marketplace data and internal expertise. Learn more about how we use and vet external sources as part of oureditorial standards.
American Council of Life Insurers
(ACLI). "
ACLI 2022 Life Insurers Fact Book." Accessed September 21, 2023.
Authors
Associate Editor & Licensed Life Insurance Agent
Tory Crowley is an associate editor and a former licensed insurance agent at Policygenius. Previously, she worked directly with clients at Policygenius, advising nearly 3,000 of them on life insurance options. She has also worked at the Daily News and various nonprofit organizations.
Editor & Licensed Life Insurance Agent
Katherine Murbach is an editor and a former licensed life insurance agent at Policygenius. Previously, she wrote about life and disability insurance for 1752 Financial, and advised over 1,500 clients on their life insurance policies as a sales associate.
Editor
Associate Content Director
Antonio helps lead our life insurance and disability insurance editorial team at Policygenius. Previously, he was a senior director of content at Bankrate and CreditCards.com, as well as a principal writer covering personal finance at CNET.
Expert reviewer
Financial Advisor
Maria Filindras is a financial advisor, a licensed Life & Health insurance agent in California, and a member of the Financial Review Council at Policygenius.
Questions about this page? Email us ateditorial@policygenius.com.
I'm Jake Herskovits, a seasoned life insurance sales specialist at Policygenius, and I bring a wealth of expertise to shed light on the complexities of life insurance claims and denials. My extensive background in the insurance industry positions me as a knowledgeable source on the intricacies involved in policy payouts and the reasons behind claim rejections.
The article you provided delves into the nuances of life insurance claim denials, emphasizing the rarity of such occurrences — only 0.02% of life insurance payouts were reportedly delayed or denied at the end of 2021. This statistic is a testament to the generally smooth claims process within the industry.
The reasons for life insurance claim denials are well-explored in the article, and I'll elaborate on each concept mentioned:
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Exclusions in Policy:
- Insurers may deny claims based on exclusions outlined in the policy. This could include causes of death explicitly excluded from coverage, such as suicide during the contestability period (usually the first two years of a policy).
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Insurance Fraud:
- Life insurance claims can be denied in cases of insurance fraud. If the insured provided false information intentionally on the application, the benefit may be reduced or completely denied.
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Death by Suicide:
- Insurers won't pay out for death caused by suicide during the contestability period. This is a common clause in life insurance policies to prevent fraudulent claims.
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Excluded Activities:
- Policies may not cover certain causes of death related to excluded activities. For instance, if the insured dies while committing a crime or engaging in an explicitly excluded activity like piloting a plane in policies with an aviation exclusion.
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Missed Premium Payments:
- If the policyholder stops paying premiums and misses multiple payments, the policy may be canceled, and the claim could be denied.
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Misrepresentation on Application:
- If any information on the application is intentionally misrepresented, the benefit could be reduced or denied.
The article rightly emphasizes that if a claim is denied, there is typically a clear reason for it, such as discrepancies in beneficiary information or death during the contestability period.
The process of appealing a denied claim is also outlined, suggesting that contacting the insurance company, providing necessary documentation like autopsy reports and medical documents, and appealing the rejection are potential steps. It's crucial to have solid evidence when contesting a denial, and the article recommends involving state insurance departments, attorney generals, or even hiring a lawyer for more complex cases.
The piece concludes by offering proactive measures to prevent claim denials, such as automating premium payments, being honest on the application, and keeping beneficiary information up-to-date.
Overall, the comprehensive information provided in the article aligns with industry standards and best practices, offering valuable insights into the complex world of life insurance claims and denials.
