When a life insurance claim is denied within the first two years of a policy, it’s often because of what’s called the contestability period. This is a window of time when insurers are allowed to challenge the validity of the policy and investigate whether the application was truthful. For grieving beneficiaries, these denials feel like a betrayal—especially after paying premiums in good faith. Below, we walk through the most common reasons insurers deny claims during the contestability period, and real-world examples of how families push back and win. When you have Wyoming life insurance claim problems call us.
What is the Contestability Period in Life Insurance?
The contestability period is generally the first two years after a life insurance policy takes effect. During this time, the insurer can investigate the insured’s original application and deny claims if it discovers misstatements or omissions—even if they didn’t contribute to the cause of death. This window is used aggressively by insurers to avoid payouts. Example: A woman in New Jersey died 18 months after purchasing a policy. Her insurer denied the claim after discovering she failed to disclose a history of anemia—even though her death resulted from a car accident unrelated to her medical history.
Top Reasons Life Insurance Claims Are Denied During the Contestability Period
Alleged False Statements on the Application
One of the most frequent reasons for denial is an accusation that the insured lied or left something out on the application. This could be a forgotten doctor visit, a misremembered weight, or failure to mention anxiety medication. But not every misstatement is grounds for denial—especially if it wasn’t material. Example: A Texas man failed to mention a one-time ER visit for chest pain five years earlier. He died from a construction accident, yet the insurer denied the claim. His family challenged it, and the court ruled the omission wasn’t relevant to the cause of death.
Policy Language That Favors the Insurer
Insurers often rely on vague or complex policy language to justify denials. If the wording is open to more than one interpretation, beneficiaries can challenge the insurer’s reading of the contract. Example: A California policy excluded “death due to high-risk activities,” and the insurer claimed that riding a personal electric scooter counted. The family argued that this interpretation was unreasonable and won in court, where the judge said the term was too ambiguous.
Disputes Over Medical History
Many claims are denied because insurers dig through the insured’s past medical records and try to find undisclosed conditions. Often, these conditions had no role in the death and were not intentionally hidden. Example: A Pennsylvania woman died of a brain aneurysm. The insurer found she hadn’t disclosed her treatment for seasonal allergies. Her children sued, showing that allergies had nothing to do with her death—and won the full payout.
Incomplete or Sloppy Investigations
Insurers are supposed to perform thorough investigations before denying a claim. If they rush, skip steps, or ignore key records, the denial may not hold up. Example: A Florida insurer denied a claim based on a supposed undisclosed heart condition but failed to request the deceased’s cardiology records. The family proved the insurer had made a decision without reviewing available evidence. The denial was reversed.
Delayed Processing That Harms Beneficiaries
Delays during the contestability period are common and often used as a tactic to pressure beneficiaries into giving up. Long processing times can cause financial and emotional distress. Example: A Georgia family waited nine months for a decision on their mother’s claim. The insurer kept requesting duplicate documents. Their attorney filed suit for breach of contract due to the unreasonable delay, and the family received full benefits plus interest.
Lack of Proper Notification About Contestability Rules
Insurers must clearly disclose the contestability rules in the policy. If they bury it in fine print or fail to explain it clearly, beneficiaries may have grounds to sue for lack of transparency. Example: An Ohio beneficiary had no idea the claim was denied under a contestability clause because the letter simply said "ineligible due to policy provisions." The court found the insurer failed to explain the contestability period and ordered a payout.
Rescinding the Entire Policy
Some insurers don’t just deny the claim—they try to void the policy entirely through a process called rescission. This usually requires proof of intentional fraud and must follow state-specific legal procedures. Example: A Missouri man’s life insurance was rescinded because he omitted a history of depression. His family proved that he disclosed his medication and the insurer failed to follow legal rescission notice requirements. The court reinstated the policy.
Violations of the Insurance Contract
If an insurer denies a claim without honoring the policy’s terms—such as by misapplying exclusions or ignoring covered causes of death—it may be liable for breach of contract. Example: A policy in Illinois covered accidental death but was denied after the insured drowned while boating. The insurer claimed alcohol was involved but had no toxicology evidence. The court found this violated the contract and ordered payment.
Insurance Company Bad Faith
Bad faith happens when insurers act dishonestly, stall claims, or deny payouts without valid reasons. In some cases, courts award punitive damages to punish this behavior. Example: A New York insurer denied a claim within days of the death, stating “suspected misrepresentation” without conducting an investigation. The family sued for bad faith and was awarded triple the death benefit.
Noncompliance With State Insurance Laws
Each state has laws about how contestability reviews must be handled. If an insurer breaks these rules, a denial may be overturned and penalties imposed. Example: In Colorado, an insurer missed the statutory deadline to respond to a claim during the contestability period. The court ruled in favor of the beneficiary, citing state insurance law violations.
Can You Fight a Contestability Period Denial?
Absolutely. Many families have successfully fought back against contestability-based denials. If the reason for denial is flimsy, unrelated to the death, or based on vague policy terms, legal action may result in a full payout—and even additional compensation.
When to Contact a Life Insurance Lawyer
You should talk to a lawyer if: The denial is based on an old or minor medical detail
The insurer uses ambiguous policy wording
There are long delays with no clear updates
You feel pressured to withdraw the claim
You’re not getting a straight answer about why the claim was denied
An attorney can obtain medical records, request internal claim files, and push the insurer to pay what’s owed—whether through negotiation or litigation.
Denied a Life Insurance Claim Within the First Two Years? We Can Help.
If your loved one’s life insurance was denied during the contestability period, don’t give up. Our law firm focuses exclusively on life insurance litigation, and we’ve helped clients nationwide recover payouts wrongfully withheld. Whether it’s a misrepresentation claim, vague exclusion, or delayed investigation—we’ll fight for your rights and your financial security. Contact us for a free case review today.
Frequently Asked Questions
What does contestability mean in life insurance?
The contestability period is a limited time—typically the first two years after a life insurance policy is issued—when the insurance company can deny a claim if it discovers mistakes, omissions, or misrepresentations in the application. Even if the cause of death has nothing to do with the alleged error, the insurer may still use it to challenge the payout.
Example: A 45-year-old man in Nevada died in a plane crash one year after getting life insurance. The insurer denied the claim after discovering he had not listed a prior sleep study for mild apnea—despite it having no connection to his death.
Can a claim be denied for something the insured forgot to mention?
Yes—but only if the omitted information would have affected the insurer’s decision to issue the policy or set the premium. Innocent mistakes about non-material facts often aren't enough to justify a denial, especially if they had no impact on the cause of death.
Example: In North Carolina, a policyholder forgot to mention she had seen a chiropractor for minor back pain. When she died from a brain tumor, the insurer tried to deny the claim, but the court ruled the omission was irrelevant and ordered payment.
What if the policy was rescinded?
If an insurer rescinds a policy, it means they are voiding it completely—treating it as if it never existed. This is only allowed when there's clear evidence of fraud or significant misrepresentation, and the insurer must follow specific legal procedures to do so.
Example: A Michigan man’s life insurance was rescinded after he died of a heart attack, and the insurer claimed he failed to disclose high blood pressure. However, his records showed he had disclosed it during a paramedical exam. The court found the rescission invalid due to insurer error.
Can I still win if the cause of death wasn’t what they’re denying over?
Yes. If the insurer’s denial is based on something unrelated to how the insured died, you may be able to overturn it. Courts often look at whether the alleged misrepresentation was material and whether it contributed to the loss.
Example: A woman in Arizona died from sepsis after surgery, but the insurer denied her claim because she failed to disclose anxiety medication. Her family sued, arguing the anxiety was unrelated to her death, and the judge agreed, ordering the full benefit paid.
Do I need a lawyer to fight a contestability denial?
While it's not required, having an experienced life insurance attorney can significantly increase your chances of reversing a denial. These cases often involve complex legal arguments, medical records, and interpreting policy language that favors the insurer.
Example: A Colorado family hired a lawyer after a claim was denied due to an alleged undisclosed “heart murmur.” The attorney uncovered that the condition was mentioned in prior documentation provided to the insurer. The claim was paid in full after legal intervention.