By the very nature of their business, life insurance companies take on a calculated risk. When issuing a policy, insurers bet that the policyholder will pay more in premiums over time than the company will ever have to pay out in death benefits. This is precisely why premiums increase with age or deteriorating health—the greater the risk, the higher the cost to the policyholder.
To make informed decisions about this risk, life insurance companies conduct thorough assessments before issuing a policy. One key element of this process is the health questionnaire, which asks applicants about their medical history, lifestyle habits (like smoking), and potentially risky activities (such as skydiving). Based on this information, the insurer determines two things:
Whether the applicant qualifies for coverage at all
What premium to charge, based on the risk profile
The Role of Truth in the Application Process
Because insurers rely on application data to assess risk, honesty during the application process is essential. If an applicant misstates or omits crucial information—for example, by denying they smoke when they actually do—this could lead the insurer to issue a policy it wouldn’t have otherwise approved or to charge lower premiums than the risk profile justifies. In legal terms, this kind of dishonesty is known as a "material misrepresentation."
A material misrepresentation is any false statement or omission that affects the insurer’s decision to issue the policy or determine its terms. When uncovered, especially during the contestability period (typically the first two years of the policy), such misrepresentations can serve as grounds for the insurer to deny a claim entirely.
Insurers Misusing the Misrepresentation Defense
While the logic behind enforcing honesty is clear, life insurance companies have been known to misuse this doctrine. As attorneys who focus exclusively on contesting wrongful life insurance denials, we often see insurers latch onto minor inconsistencies or innocent oversights and inflate them into justifications for denying claims.
A Case of Omission: Deric’s Story
One particularly troubling case involved a man named Deric, who applied for a life insurance policy at the age of 42. He filled out a lengthy application and appeared to be in excellent health. However, he left one question blank: the field asking for his most recent blood pressure reading. When he submitted the application through his insurance broker, the omission went unnoticed, and the policy was issued without any follow-up from the insurance company.
Tragically, Deric passed away 18 months after the policy was issued, placing the claim within the contestability period. His wife, Tonya, submitted a claim for death benefits. Instead of beginning a fair investigation, the insurer quickly zeroed in on the unanswered blood pressure question. Without contacting Tonya or seeking Deric’s medical records, the insurer denied the claim on the grounds that the blank field constituted a "material misrepresentation."
Fighting Back With Legal Expertise
Too grief-stricken to fight alone, Tonya reached out to an attorney specializing in life insurance claim denials. The attorney requested Deric’s medical records and found that his blood pressure had consistently been in the normal range. There was no evidence that Deric was trying to hide a health condition. The blank was simply an oversight, and one the insurer could have clarified before issuing the policy.
The attorney presented this information to the insurance company’s internal appeals board, emphasizing that the denial lacked factual and legal basis. Faced with concrete evidence and the threat of a lawsuit for bad faith denial, the insurer reversed its decision and paid Tonya the full death benefit. If you need a Kentucky life insurance denial attorney call today.
Lessons for Policyholders and Beneficiaries
This case demonstrates how even a small omission can be weaponized by an insurer seeking to protect profits. It also highlights the importance of legal support when facing a claim denial. Just because an insurance company says a claim is invalid doesn’t make it so.
If you’ve received a claim denial citing a material misrepresentation, don’t assume the insurer is acting fairly. Contact our firm for a free consultation. We’ll assess your case, and if we believe the denial is unjustified, we’ll fight to get you the benefits your loved one intended—at no cost to you unless we win.