When a loved one passes away, the last thing a grieving family expects is to face a life insurance claim denial. Yet every year, thousands of legitimate claims are denied—often using boilerplate justifications that mask the insurer’s real motivation: to avoid paying out benefits.
Life insurance companies make their profits by collecting premiums—not by paying out claims. In fact, in a single year, U.S. insurers collected over $600 million in life insurance premiums but paid out less than half that amount in benefits. That imbalance creates a strong financial incentive to deny high-value claims whenever possible.
Understanding the most common justifications insurers use to deny claims can help you recognize when a denial is legally questionable—and when you may have grounds to fight back. If you need life insurance claim help in New Jersey come to our Marlton office or call us.
1. Material Misstatements on the Application
This is the number one reason cited in claim denials. A material misstatement occurs when the insurer alleges that the policyholder provided false, incomplete, or misleading information on the application. This could include failing to disclose:
A pre-existing medical condition
Prescription medication use
Past tobacco or alcohol use
Mental health history
But not all misstatements are material. The insurer must prove that the omission would have influenced their decision to issue the policy or set the premium. In many cases, insurers seize on minor errors—such as forgetting to mention an allergy shot or reporting an outdated weight—and wrongly use them to deny claims.
Example: A man failed to disclose mild asthma treated five years earlier. He died in a car accident, and the insurer denied the claim due to the omission. With legal intervention, the denial was overturned and the full benefit was paid.
2. Death Excluded Under Policy Terms
Policies often contain exclusion clauses that list specific causes of death that are not covered. This is especially common with Accidental Death and Dismemberment (AD&D) policies, which exclude:
Suicide
Drug or alcohol-related incidents
Certain high-risk activities (skydiving, racing, etc.)
Criminal acts
However, these exclusions must be interpreted strictly and fairly under the law. Insurers frequently misapply them or stretch the language to fit the facts of a case. For instance, a fatal fall might be reclassified as suicide, or a natural death may be blamed on “drug interaction” to fit an exclusion.
3. Suspicious Timing or Circumstances
If the insured dies shortly after the policy is issued—especially within the first two years—the insurer may label the death “suspicious” and invoke the contestability period, a window during which they can investigate the application for fraud or misrepresentation.
In some cases, insurers delay payment indefinitely while investigating. In others, they deny the claim outright, alleging intent to defraud—even with limited or circumstantial evidence. These denials are frequently challengeable.
Example: A woman died six months after her policy began. The insurer delayed payment, claiming “unusual circumstances.” We obtained her full medical records and showed she had disclosed her health history accurately. The insurer paid in full after receiving our appeal.
4. Alleged Policy Lapse for Non-Payment
A lapsed policy is another frequently cited reason for denial. If premiums weren’t paid, insurers claim the policy was no longer in force. But every policy includes a grace period—often 30 to 60 days—during which coverage remains active even if payment is late.
Insurers sometimes deny claims without verifying whether the payment was made within that window or whether the policyholder received proper notice of lapse. In employer-sponsored plans, HR errors or missed payroll deductions can also cause wrongful lapses.
Denied Life Insurance Claims Aren’t Final—And You Can Fight Back
Receiving a denial letter can feel like the end of the road—but it’s not. In reality, many denials can be reversed through a formal appeal or legal action. Insurance companies count on you walking away quietly, but with the right legal help, you can hold them accountable.
You have the right to:
Review the denial in detail
Obtain a full copy of the policy and claim file
Submit a legally grounded appeal
File a lawsuit if the insurer acted in bad faith
Why You Should Speak With a Life Insurance Denial Attorney
Life insurance law is complex, especially when it involves employer-sponsored policies governed by ERISA. If you’ve received a denial—or your claim is being delayed—an experienced attorney can investigate the true reason, challenge any false assumptions, and compel the insurer to pay.
Our firm specializes in life insurance claim denials and has recovered benefits from nearly every major insurer—including MetLife, Prudential, AIG, Lincoln, Colonial, and others. We prepare detailed, fact-based legal appeals—often exceeding 100 pages—to dispute wrongful denials and recover full payouts.
Schedule a Free Consultation Today
If your life insurance claim has been denied or delayed, don’t accept the insurer’s word as final. Contact us today for a free consultation. We’ll review your case, explain your options, and fight to secure the benefits your loved one intended for you. You pay nothing unless we win.