Life insurance companies often deny claims by accusing the policyholder of a “material misrepresentation” on the application. But what happens when the alleged misrepresentation has nothing to do with health, risk, or finances and instead involves gender identity?
Can a life insurer really refuse to pay because a transgender policyholder listed their legal gender instead of their sex assigned at birth?
Unfortunately, some insurers try. And when they do, the result is often a wrongful denial that must be fought.
Over the past two decades, transgender Americans have gained increasing legal recognition. Court orders, amended birth certificates, and updated identity documents now reflect a person’s legal gender in most states. Yet some insurance companies still rely on outdated assumptions and attempt to weaponize gender identity to avoid paying valid life insurance claims.
We recently handled a case that illustrates exactly how this happens and how it can be defeated.
What Is a “Material Misrepresentation” in Life Insurance?
Life insurance is a contract. The insurance company relies on the information in the application to decide whether to issue the policy and at what price. If the applicant lies or withholds important facts, and the insurer would have made a different decision had it known the truth, the company may claim there was a “material misrepresentation.”
If a misrepresentation is truly material, the insurer can attempt to rescind the policy even after the insured has died.
Common examples include:
Lying about cancer, heart disease, or other serious medical conditions
Hiding a history of drug or alcohol abuse
Failing to disclose dangerous activities such as skydiving or auto racing
But gender identity is not a medical condition, not a risky activity, and not automatically relevant to life expectancy. That is where many insurers cross the line.
A Real Case: Denial Based on Gender Identity
Marcia was a transgender woman who had legally transitioned years earlier. She had undergone gender reassignment surgery, obtained a court order, and updated all of her legal documents. Her birth certificate and identification listed her as female.
At age 46, she applied for a $700,000 life insurance policy.
On the application, she truthfully listed her sex as female. The application did not ask whether she was transgender. It did not ask about sex assigned at birth. It did not ask about transition history or surgical history.
The policy was issued.
One year later, Marcia was tragically killed in a car accident.
Her beneficiary, Cindy, submitted the claim.
Instead of paying, the insurance company denied the claim and accused Marcia of fraud. Their argument was that she failed to disclose that she had been born male and that this was a “material misrepresentation.”
In other words, they accepted her premiums, but after her death they decided her gender suddenly mattered.
Why the Denial Was Legally Wrong
Cindy contacted our firm, and we immediately reviewed the policy, the application, and the denial letter.
The insurance company’s position was legally indefensible for several reasons:
Marcia’s legal sex was female by court order and amended birth certificate
She answered the application truthfully as it was written
The application did not ask about birth sex or transition history
There was no intent to deceive and no false statement
If anything, insuring someone as female statistically benefits the insurer due to longer life expectancy
Most importantly, insurance companies cannot deny claims based on information they never asked for.
They do not get to rewrite the application after the insured has died.
How the Denial Was Reversed
We filed a formal appeal and presented a detailed legal argument showing that:
There was no misrepresentation
There was no duty to disclose information that was never requested
The insurer was attempting to impose a retroactive and discriminatory standard
Courts consistently uphold legal gender status in contract and identity disputes
We also made it clear that if the company did not reverse course, the case would likely become a highly visible lawsuit involving both insurance bad faith and civil rights issues.
Shortly thereafter, the insurer reversed its decision and paid the full $700,000 benefit.
Why This Matters
This was not just a technical win. It exposed a tactic some insurers use to look for any excuse to avoid paying large claims, even when that excuse has nothing to do with actual risk or honesty.
If they can find a “difference” after death, they will try to use it.
That is why these cases must be fought.
When You Should Talk to a Life Insurance Lawyer
You should get legal help immediately if:
A claim was denied based on alleged misrepresentation that was never asked about
The insured was transgender or nonbinary and listed their legal gender
The insurer launched a post death investigation to find a reason not to pay
The denial feels technical, manufactured, or unfair
These cases are not handled correctly by most general practice lawyers. They require deep experience with life insurance rescission law and bad faith claim litigation.
Frequently Asked Questions
Can a life insurance company deny a claim because someone was transgender?
They may try, but that does not mean the denial is legal. If the insured listed their legal gender and answered the application truthfully, these denials are often wrongful.
Is it a misrepresentation to list your legal gender instead of your sex at birth?
No. If your legal documents reflect your gender and the application does not ask about sex assigned at birth, there is no misrepresentation.
What if the insurer never asked about gender history but denied the claim anyway?
That is one of the strongest grounds for appeal. You cannot be accused of hiding information you were never asked to provide.
Does legal gender recognition matter in these cases?
Yes. Courts generally respect court ordered gender changes and amended birth certificates in contract disputes, including insurance.
Should I hire a lawyer for this kind of denial?
Absolutely. These cases involve complex insurance law, rescission rules, and bad faith litigation. The right lawyer can be the difference between a denied claim and a full payout.