How to Fight a Denied Life Insurance Claim

Insurance companies are businesses competing for profit. Beneficiaries are usually surviving spouses and children trying to stay financially afloat after losing the person who supported them. Paying a death claim reduces an insurer’s profit. There is a conflict built into the arrangement, and denied claims are where that conflict surfaces.

The good news is that a denial is reversible far more often than people assume. Most denials are never challenged at all, which means insurers rarely have to defend them.

Start With the Denial Letter

Everything you need to begin is in that letter. Insurers are obligated to tell you why they denied the claim, and in doing so they hand you their case.

The letter will tell you several things:

• The stated reason for the denial. Medical history, a drunk driving conviction, tobacco use, a lapse in premium, or something disclosed incorrectly on the application.
• Where their evidence came from. If the denial is medical, they name the medical office that supplied the records. If it involves a conviction, they name the court and the year.
• The application questions they are relying on. Usually quoted directly, followed by an assertion that a question was not answered truthfully.
• The sentence that appears in nearly every denial. Had we known this information, we would not have issued the policy.

Read it closely. A good appeal answers every basis the insurer gave, one at a time, with evidence.

If They Sent a Check With the Letter, Do Not Cash It

What the Insurer Is Actually Claiming

Most denials on newer policies come down to one argument: that the application contained a material misrepresentation, and that the true facts would have changed the underwriting decision.

There is a widespread belief that insurers obtain a person’s medical records before issuing a policy. For most policies they do not. Ordering records costs money, and unless the death benefit is large or the applicant is elderly, insurers generally skip it and rely on the answers given on the application.

That decision is theirs to make. But it also means the insurer chose not to look, then later denied a claim on the basis of something it could have found at the outset. Where the answer was innocent, immaterial, or a product of a confusing question, that is an argument worth making.

Common Reasons Claims Get Denied

• Alleged misrepresentation on the application, usually medical history, tobacco use, or income
• Death inside the contestability period, the first two years, when the insurer may investigate freely
• Lapse for non-payment, sometimes where the required lapse notice was never properly sent
• An exclusion, such as suicide within the contestable window, or an aviation or hazardous activity clause. Where the policy paid on accidental death, see accidental death claim help
• Beneficiary problems, including outdated designations, competing claimants, or a disputed change
• Paperwork failures at enrollment, which are especially common with employer-provided coverage

Ways a Denial Gets Reversed

Every denied claim has its own facts, so there is no single approach that works everywhere. In practice, these are the routes that produce results.

• A fact-based internal appeal. The insurer reviews the decision again, this time with the evidence that was missing and a direct answer to each stated reason.
• Complete medical records. Insurers frequently decide on a partial record. The full history often tells a different story than the excerpt they relied on.
• Materiality. Even where an answer was wrong, the insurer must show the error actually mattered to the underwriting decision. Often it did not.
• State law. Contestability rules, lapse notice requirements, and replacement policy protections vary by state and are frequently applied incorrectly.
• Escalation beyond the claims examiner. The person who denied your claim is rarely the person with authority to reverse it.

About the Department of Insurance

At the end of the denial letter there is usually a line inviting you to contact your state’s insurance department. It is worth understanding what that does and does not achieve.

State insurance departments are regulators. They can record a complaint, and patterns of complaints matter to them. What they cannot do is order an insurer to pay your individual claim or advocate on your behalf. Filing a complaint is reasonable, but it is not a substitute for an appeal.

What It Costs to Fight

This is where most beneficiaries stop, and it is the reason a great many valid claims stay unpaid.

Litigation is expensive and slow. Attorneys generally work these cases on contingency at roughly a third to 40 percent of the recovery, and only if the claim is large enough to justify the work. A $50,000 or $100,000 death benefit usually is not, which is why those claims get turned away.

I work differently. There is no retainer and no hourly billing. My fee is 10 percent, and it applies only if the claim pays. If it does not pay, you owe me nothing.

Do Not Let the Appeal Window Close

Policies and plans set deadlines for appealing a denial, and employer-provided coverage often imposes strict ones. Missing the window can end the matter regardless of how strong your position is.

Note the date on the denial letter today. If you are unsure what deadline applies to your policy, ask rather than assume.

Our main practice site covers these denials in more depth, including how a denied claim gets reversed and what counts as a material misrepresentation.

If you have not yet filed, or the claim is simply sitting without a decision, those are different problems with different answers. See filing a claim properly and what happens during a claim investigation.