Life insurance claim denials frequently trace back to allegations of material misrepresentation on the original application. Insurers often argue that incorrect or incomplete answers justify refusing to pay benefits, even when premiums were accepted and the policy remained active until death. These disputes commonly arise only after the policyholder passes away, when the insurer conducts a retrospective review of the application and underwriting file.
Material misrepresentation does not always involve intentional deception. In many cases, inaccuracies result from misunderstandings, vague questions, outdated medical information, or applications completed by insurance agents rather than the insured. Despite this, insurers often treat any discrepancy as grounds for denial, particularly when the claim arises early in the policy’s life.
How Insurers Investigate Applications After Death
When a claim is submitted, insurers frequently request medical records, prescription histories, and prior physician notes. These records are then compared against application responses line by line. Even small inconsistencies may be cited as justification for rescinding the policy.
This process is rarely neutral. Insurers already know a payout is at stake, and application reviews are often conducted with the goal of identifying a defensible reason to deny the claim. Beneficiaries are typically not informed of this investigation until a denial letter arrives.
The Contestability Period and Its Real Impact
Most life insurance policies contain a two-year contestability period that begins on the policy issue date. During this window, insurers are allowed to challenge the validity of the policy based on alleged misstatements or omissions in the application.
If the insured dies within this period, insurers may attempt to void the policy entirely and return only the premiums paid. This authority is frequently misunderstood by beneficiaries. The contestability period does not give insurers unlimited discretion to deny claims. The alleged misrepresentation must still meet legal standards.
Once the contestability period expires, insurers generally lose the ability to deny claims based on application errors unless they can prove intentional fraud. Innocent mistakes, misunderstandings, or agent-caused errors usually cannot support denial after that point.
When Application Errors Do Not Justify Denial
Not every incorrect answer qualifies as material misrepresentation. To deny a claim, insurers must show that the alleged error would have changed their underwriting decision, pricing, or issuance of the policy. Courts often reject denials where the error had no meaningful impact on risk assessment.
Agent involvement is particularly important. If an insurance agent completed the application, failed to ask proper questions, entered incorrect information, or assured the applicant that answers were acceptable, the insurer may still be bound by the policy. Insurers cannot benefit from their own agent’s mistakes while shifting blame to the policyholder.
Other critical considerations include whether the insured was given an opportunity to review the completed application, whether medical records actually contradict the answers provided, and whether the alleged omission relates in any way to the cause of death.
When Contestability Becomes Bad Faith
Some insurers misuse the contestability period as a denial strategy rather than a fraud safeguard. Common warning signs include reliance on trivial medical details, selective reading of records, or ignoring evidence that supports coverage.
Denials may cross into bad faith when insurers exaggerate discrepancies, disregard agent misconduct, or rescind policies without a fair investigation. In these situations, beneficiaries may have legal claims beyond the policy benefits themselves.
What Beneficiaries Can Do After a Denial
A denial based on application misrepresentation is not the end of the process. Beneficiaries have the right to challenge the insurer’s conclusions, demand the underwriting file, and dispute whether the alleged error was truly material.
Legal review often reveals that the insurer’s position is weaker than the denial letter suggests. Many contested claims are resolved through appeals or litigation once the insurer is required to defend its reasoning under scrutiny.
Final Thoughts
The contestability period is not a free pass for insurers to avoid paying claims. Application errors do not automatically void coverage, and many denials rely on aggressive interpretations rather than legal standards.
When a life insurance claim is denied based on alleged misrepresentation, the most important question is not whether an error existed, but whether the insurer can legally rely on it. In many cases, they cannot.