Why Life Insurance Claims Get Denied (and How to Avoid It)

Life insurance exists to pay when your family needs it most, so it is unsettling to hear that claims sometimes get denied. The reassuring fact is that the large majority of claims are paid. Denials usually come down to a short list of causes, and most are avoidable if you know what they are.

1. Misstatements on the application

This is the most common cause. If an applicant leaves out or misstates something material, such as a health condition, tobacco use, medications or a risky hobby, the insurer may deny the claim or reduce the benefit if it discovers the issue. Material means the information would have affected the insurer's decision or price. Honest mistakes can still cause trouble, so read each question carefully and answer completely. See how underwriting works.

2. Death within the contestability period

Most policies include a contestability period, typically the first two years. During this time, the insurer can review the application more closely if the insured dies, and it can contest the claim if it finds material inaccuracies. After the period ends, the insurer's ability to contest is generally limited, with exceptions such as fraud, depending on state law.

3. The policy lapsed

If premiums stop and the grace period passes, the policy lapses and no death benefit is owed for a death afterward. Setting up automatic payments and responding to notices avoids this. See what happens if you miss a payment.

4. Death outside the coverage period

A term policy pays only if death occurs during the term. If the term has ended and the policy was not renewed or converted, there is nothing to claim.

5. Exclusions

Policies list circumstances that are not covered. Common examples include:

• A suicide clause, which typically limits or excludes payment if death by suicide occurs within the first two years.
• Fraud or intentional misrepresentation.
• Certain hazardous activities or war-related deaths, depending on the policy.

Read the exclusions in your policy so you know what applies.

6. Beneficiary problems

Disputes can arise when the beneficiary form is outdated, unclear or missing. Money may be delayed while the insurer determines who is entitled to it. See how to choose a beneficiary.

How to reduce the risk

• Answer every application question accurately and completely.
• Keep copies of your application and policy.
• Pay premiums on time, ideally by automatic payment.
• Keep beneficiary designations current.
• Tell your family where the documents are.
• Know your policy's end date and any conversion deadline. See term life conversion.

If a claim is denied

1. Ask for the reason in writing. The insurer should explain the specific basis for the denial.
2. Review the policy and application. Compare the denial reason to what the contract actually says.
3. File an appeal. Most insurers have an internal review process with deadlines.
4. Contact your state department of insurance. It can look into complaints against insurers.
5. Consider an attorney. Lawyers who handle life insurance disputes often offer an initial consultation, and some work on contingency.

Keep records of every call, letter and email. If you are a beneficiary beginning the process, our guide on how to file a claim walks through each step.