Why Don’t Insurance Companies Investigate Before Approving Policies?
Many policyholders wonder why insurers don’t thoroughly verify information during the application process. The answer is cost and convenience. Carriers often issue no-exam policies based solely on online questionnaires. They rely on self-reported information with the assumption of honesty. But that reliance comes with a safety net: the contestability period. Insurers essentially shift the investigative burden until after death, when there’s more incentive to scrutinize details and possibly avoid a payout.
In truth, contestability functions as a built-in hedge for insurers. They save money upfront by streamlining underwriting, then investigate later if and when a claim is filed—what’s often referred to as post-claim underwriting. If you need life insurance claim help in Idaho call us.
The most common red flags prompting post-death investigations during the contestability period include:
The insured dies from an illness not disclosed in the application
There’s suspicion about undisclosed drug or alcohol use
The policyholder lied about smoking status or weight
Risky hobbies (like scuba diving or free climbing) were omitted
Occupation or travel habits were inaccurately described
The stated age or income was deliberately altered to lower premiums
Even if the policyholder died in a car accident, if the insurer finds out the person had undisclosed heart disease, for instance, they may argue that the original application was fraudulent and use that to challenge the payout.
How Contestability Reviews Can Lead to Claim Denials
If a life insurance policyholder passes away during the contestability period, and the insurer finds something it considers inaccurate on the original application, there are two primary outcomes:
The claim is denied entirely: This occurs if the insurer believes the misstatement was material and would have disqualified the applicant from coverage in the first place.
The death benefit is reduced: This happens when the insurer determines the applicant would have qualified, but at a higher premium. In this case, they’ll deduct the difference from the payout.
However, these decisions are often highly subjective and open to challenge. Even minor errors—such as failing to disclose mild depression or inaccurately listing height or weight—can be used to justify a denial. In such cases, legal support is critical.
What About Suicide and the Contestability Period?
Suicide during the contestability period is typically excluded under a separate clause known as the suicide exclusion. If the policyholder takes their own life within two years of purchasing the policy, the insurer will usually return only the paid premiums and not pay the full benefit. After the contestability period ends, suicide is generally covered like any other cause of death—unless a lapse in coverage restarted the contestability period.
This provision, like contestability itself, is often misunderstood and frequently invoked by insurers during sensitive and emotionally charged times.
When Does the Contestability Period Start Over?
Many people assume that once the two-year contestability period passes, they’re in the clear. However, a lapse in coverage—even if it’s only a month—can reset the clock. If the policyholder misses a payment, and the policy is reinstated, the insurer may treat it as a new policy with a new contestability period. This reset can expose long-standing policies to scrutiny if death occurs within two years of reinstatement.
Post-Claim Underwriting and Legal Implications
Post-claim underwriting refers to the insurer’s practice of scrutinizing an application only after the insured has passed away. While insurers are legally allowed to conduct such reviews within the contestability period, it’s often where wrongful denials occur. Families may be left blindsided by a denial months after filing a claim, even when the original cause of death appears unrelated to the supposed misstatement.
What’s worse, these investigations can last for months, leaving grieving beneficiaries in financial limbo—despite having paid years of premiums for protection that now seems out of reach.
Can Beneficiaries Fight Contestability Denials?
Absolutely. In many cases, a life insurance denial based on contestability can be challenged and overturned. Legal success often depends on demonstrating that:
The misstatement was minor or unintentional
The insurer could have discovered the discrepancy before issuing the policy
The misrepresentation did not affect the risk or cause of death
The insurer failed to follow its own underwriting or review protocols
Even in cases where some information was omitted or misstated, experienced life insurance attorneys can negotiate for a partial payout—or, as in many of our cases, secure the full death benefit by showing that the insurer’s justification does not meet the legal threshold for rescission.
Turn to a Life Insurance Attorney if You’re Facing a Contestability Dispute
If your loved one’s life insurance claim is under review or has been denied due to contestability, time is critical. Insurers count on grieving families not having the resources or energy to push back. But with a dedicated legal team on your side, you can challenge unfair denials and recover the benefits your loved one intended for you.
We’ve successfully resolved countless contestability disputes, including high-profile cases involving alleged misrepresentations, suicide exclusions, and post-claim underwriting abuse. Let us handle the legal battle while you focus on healing.