Denied Life Insurance Claims Due to Misrepresentation During the Contestability Period: What You Need to Know
Insurers prioritize profit over policy promises, and one of the most common tactics they use to avoid paying out claims is accusing applicants of making material misrepresentations on their applications. These accusations typically arise during the contestability period—a legally defined window of time when insurers are permitted to investigate claims and potentially deny them based on application discrepancies. Understanding what constitutes a material misstatement, how insurers use the contestability clause, and what steps you can take to challenge a denial can make all the difference in securing the benefits your family is entitled to.
What Is the Contestability Period in Life Insurance?
Most life insurance policies include a contestability period that lasts for two years from the date the policy is issued. During this time, the insurer has the right to review the insured's application in detail and investigate any discrepancies if a claim is filed. If the insured dies within this period, the insurer may look for reasons to rescind the policy based on information they believe was omitted or misrepresented. However, once the contestability period expires, the insurer can no longer void the policy for ordinary misrepresentation—unless they can prove fraud, which involves intentional deception. Unfortunately, even honest mistakes can be grounds for denial within the two-year window, and insurers often interpret minor inaccuracies as "material" in order to justify nonpayment.
Common Types of Misrepresentations That Lead to Claim Denials
1. Health and Medical History Misrepresentation
Omitting or downplaying medical conditions is one of the most frequent reasons for life insurance claim denials. Applicants are required to disclose pre-existing conditions, past surgeries, diagnoses, and medications. If the insurer later discovers that the insured failed to mention a chronic illness or treatment, they may argue that the misstatement was material and deny the claim—even if the undisclosed condition had nothing to do with the cause of death.
Example: In a $400,000 Prudential case, a claim was initially denied due to discrepancies involving income rather than health. The insurer argued that the policyholder inflated their income on the application. After legal intervention, the claim was reinstated and paid in full—illustrating that materiality is not always clear-cut and can be challenged.
2. Smoking and Tobacco Use Misrepresentation
Tobacco users are generally charged higher premiums due to the health risks involved. If an applicant claims to be a non-smoker but later dies and toxicology reports show nicotine use, the insurer may deny the claim, arguing that the policy would not have been issued under the same terms. Even occasional or past tobacco use can trigger scrutiny.
Example: A person who listed themselves as a non-smoker but died of a heart condition was later found to have a recent history of tobacco use. The insurer used this discrepancy to invoke the contestability clause and deny the death benefit, arguing that the premium class was incorrect based on the misstatement.
3. Occupation and Income Discrepancies
Insurers often base policy pricing on job-related risk and income levels. If an applicant misrepresents their occupation—especially if it involves hazardous work—or inflates their earnings, the insurer may argue that the risk profile was inaccurately assessed. This can lead to denial if the cause of death is even remotely related to the misrepresented job.
Example: An individual working as a construction worker may describe themselves as an “office administrator” to reduce premiums. If they die in a work-related accident, the insurer could deny the claim based on the inaccurate job classification provided on the application.
4. Concealing High-Risk Activities
Risky hobbies and activities like skydiving, scuba diving, or motorcycle racing often result in higher premiums or exclusions. If an applicant fails to disclose these pursuits and later dies in connection with one, the insurer may declare the policy void.
Example: A policyholder failed to disclose regular mountaineering excursions. After a fatal climbing accident, the insurer denied the claim, citing material misrepresentation and arguing that the risk of such activity was intentionally concealed.
5. Omitting Travel Plans to High-Risk Regions
Some policies require disclosure of intended travel to foreign countries, especially those with political unrest or high mortality risks. If an applicant dies abroad after failing to disclose these plans, insurers may argue the death falls outside the intended scope of coverage.
Example: A policyholder travels to a country under a travel advisory and dies due to civil unrest. If they had not disclosed their intention to travel to that region, the insurer might deny the claim on the basis of nondisclosure or misrepresentation during underwriting.
6. Withholding Information About Alcohol or Substance Abuse
Life insurance applications frequently ask about history of alcohol misuse or drug addiction. Failure to disclose past or ongoing substance use—even if it’s under control—can result in claim denial if the insurer later discovers the truth. This is especially common in cases where death is attributed to overdose, liver failure, or an accident potentially influenced by substance use.
Example: A policyholder dies in a car accident. Upon investigation, the insurer uncovers a history of alcohol abuse that wasn’t disclosed on the application. Even if alcohol wasn’t a factor in the accident, the insurer may argue that the omission was material to risk assessment and deny the claim.
FAQ: Life Insurance Denials Based on Misrepresentation During the Contestability Period
What is a material misrepresentation in life insurance?
It’s a false or omitted statement on the application that would have affected the insurer’s decision to issue the policy or the terms offered. These misstatements are often cited during claim denials within the contestability period.
How long is the contestability period?
Typically two years from the date the policy is issued. During this time, insurers can deny claims based on misrepresentation. Afterward, only fraud (intentional deception) justifies denial.
Does the cause of death need to be related to the misrepresentation?
Not always. Insurers may deny a claim even if the misrepresented information wasn’t related to the cause of death, though this tactic can be legally challenged.
Is smoking considered a material misrepresentation?
Yes. Tobacco use affects underwriting and premiums. If a person claims to be a non-smoker but tests show otherwise, it can result in denial.
What if the misrepresentation was unintentional?
Intent doesn’t always matter during the contestability period. However, a lawyer can argue that the mistake was immaterial and didn’t impact risk assessment.
Can income or occupation misstatements cause a denial?
Yes. If the insurer believes the risk was underreported, especially in high-risk jobs, they may deny a claim or argue that the premium class was incorrect.
Can I fight a misrepresentation-based denial?
Absolutely. Many denials are reversed with legal help, especially if the insurer’s reasoning is vague or the misstatement didn’t affect the cause of death.
What if the insurer waited too long to deny the claim?
If the contestability period has expired and no fraud is proven, the insurer cannot legally rescind the policy. A delayed denial can be challenged.
Is legal help necessary in these cases?
Yes. These are complex claims involving underwriting standards, contract law, and state insurance regulations. Legal representation significantly increases your chance of success.
Do I have to pay for legal help upfront?
No. We work on contingency—you don’t pay unless we win your case.