Can Life Insurance Be Denied After Death?

Most claims are paid in full and on time, but denials do happen. According to industry data, less than 1% of life insurance claims are denied because of different reasons, most of which are tied to problems that could've been avoided.

A policy that isn't in force won't pay out, no matter how long it was active before. Term policies end after their set period, 10, 20 or 30 years, depending on the term selected. If the insured dies even one day after expiration, there's no death benefit.

Missed premium payments cause policies to lapse. Most insurers offer a grace period before canceling coverage, usually 30 to 60 days, though this varies by policy and state. Once that window closes, the policy becomes inactive.

Some insurers allow reinstatement, though this often requires a new health evaluation and restarts the contestability period.

Life insurance applications ask detailed questions about health, habits, and lifestyle for a reason. Insurers use this information to review risk and set premiums. Lying or omitting facts can void the policy.

Misrepresentations include hiding a smoking habit, failing to disclose pre-existing conditions like diabetes or heart disease, and not mentioning dangerous hobbies such as skydiving or rock climbing. Criminal history and risky occupations also fall into this category.

A typo in your address won't cause a denial, but lies or mistakes on your application that would've changed the insurer's underwriting decision can void coverage completely.

Most life insurance policies include a two-year contestability period. During this time, the insurer may investigate the application for accuracy if the insured dies. Even if the cause of death has nothing to do with any misrepresentation, the insurer could deny the claim based on errors discovered during its review.

After two years, policies become incontestable for most application issues. Fraud is the exception, as insurers never lose the right to deny fraudulent claims, though specific fraud definitions and procedures vary by state.

Reinstating a lapsed policy restarts the contestability clock.

Every life insurance policy lists exclusions, and deaths from these causes won't result in a payout. The suicide clause is one of the most common: most policies won't pay the full benefit if the policyholder dies by suicide within the first two years. Beneficiaries may receive only a refund of premiums paid.

Death while committing a crime or participating in illegal activity voids coverage under most policies. Some policies also exclude deaths during high-risk activities like private aviation or extreme sports, unless the activities were disclosed and specifically covered.

The slayer rule prevents anyone who unlawfully causes a death from collecting the death benefit. If a beneficiary is involved in the insured's death, they forfeit their right to the payout. The funds go instead to a contingent beneficiary or the insured's estate.

Insurers often delay payment during homicide investigations, even when the beneficiary isn't a suspect. This delay shields all parties from premature payouts until the facts are clear.

Beneficiary designation problems don't always cause claims denials, but they can delay payment for months or years. Common issues include no beneficiary named on the policy, a primary beneficiary who died before the insured, with no contingent beneficiary listed, and outdated information, like an ex-spouse still named after a divorce.

When multiple people claim the death benefit, the insurer may file an interpleader action. This legal action deposits the death benefit funds with a court, which then decides who receives the money.

Policies sometimes have geographic limitations. Failure to disclose frequent travel to high-risk countries or moving abroad without updating the insurer can trigger exclusions. Travel to areas with U.S. State Department warnings may void coverage under certain policies.

If your work or lifestyle involves international travel, review your policy's travel limitations carefully. Travel restrictions and geographic limitations vary by insurer and state regulations. A quick call to your insurer will clarify whether your travels affect your coverage.

Insurance companies make mistakes, and many denials get overturned on appeal. You have several effective options to challenge unfair denials and secure the benefits your loved one intended for you.

• Review the Denial Letter. Request a written explanation if you didn't receive one. The letter should identify the specific reason for denial. Compare that reason to your policy language and check for errors in the insurer's reasoning. Sometimes denials result from administrative mistakes rather than legitimate coverage issues.
• Gather Supporting Documentation. Collect medical records, the death certificate, proof of premium payments, the original application, policy documents, and any correspondence with the insurer. This documentation forms the foundation of your appeal.
• File an Appeal. Most insurers have a formal appeals process. Employer-provided policies governed by ERISA often require appeals within 60 days of denial. Submit a written appeal that addresses each denial reason, includes supporting evidence, and references specific policy provisions that support your claim.
• Contact Your State Insurance Department. If you believe the denial was unfair, file a complaint with your state's insurance regulator. State regulators have the authority to investigate disputes, mediate between parties, and pressure insurers to reconsider questionable denials. Some states have appeals specialists who assist beneficiaries at no cost.
• Consult an Attorney. For complex cases, a lawyer can identify legal or procedural errors you might miss. Many attorneys work on contingency, meaning you don't pay unless you win. If appeals fail, an attorney can pursue mediation, arbitration, or litigation.

Life insurance claims can be denied after death, but most denials are preventable. Honest answers on applications, timely premium payments, and updated beneficiary information are the best ways to avoid problems.

If a claim is denied, beneficiaries have options through appeals, state regulators, and legal action.