Life insurance companies often deny high value claims by relying on technical defenses that sound convincing on paper but fall apart under legal scrutiny. Understanding why claims get denied, and more importantly how those denials can be challenged, is critical for beneficiaries facing a sudden loss and financial uncertainty.
Our firm recently resolved a $1,300,000.00 denied Lincoln Financial life insurance claim, securing the full death benefit for the beneficiary after the insurer initially refused to pay. This case highlights several of the most common reasons life insurance companies deny claims and how those denials can be overcome with the right legal strategy.
Why Life Insurance Companies Deny Large Claims
When a claim involves a substantial death benefit, insurers often conduct heightened reviews. These reviews are frequently framed as routine investigations but are often designed to identify any possible basis to deny or delay payment. Below are some of the most common denial arguments insurers rely on and how beneficiaries can respond.
1. Death During the Contestability Period
The contestability period generally lasts two years from the policy issue date. During this time, insurers are permitted to review the original application and investigate whether the insured made any misrepresentations or omissions.
Common allegations include failure to disclose medical conditions, inaccurate lifestyle disclosures, or incomplete answers to health questions. Insurers often argue that even minor inaccuracies justify rescinding the policy.
What beneficiaries should know:
The insurer must prove the misrepresentation was material and knowingly made
Innocent mistakes or unrelated omissions do not automatically justify denial
The cause of death does not have to be connected to the alleged misstatement, but intent still matters
In high dollar cases, contestability denials are often aggressively challenged and frequently overturned when properly analyzed.
2. Alleged Lapse Due to Missed Premium Payments
Another common defense is that the policy lapsed due to nonpayment of premiums. Insurers may claim coverage terminated before death, even when premiums were deducted automatically or paid through an employer.
What beneficiaries should do:
Review the full premium payment history
Confirm whether a grace period applied at the time of death
Determine whether notices were properly sent as required by the policy and state law
Many lapse denials fail when insurers cannot prove proper notice or when waiver of premium provisions apply.
3. Drug or Alcohol Related Death Allegations
Life insurance policies frequently include exclusions tied to drug use or intoxication. Insurers may deny claims by labeling deaths as self inflicted or the result of substance abuse.
Key points beneficiaries should understand:
Accidental overdoses are often misclassified
Prescription medication interactions are frequently misunderstood
The insurer must rely on policy language, not assumptions
In many cases, toxicology reports are selectively interpreted to support denial, which can be successfully challenged.
4. Alleged Failure to Disclose Medical History
Insurers often claim that the insured failed to disclose a prior diagnosis, treatment, or symptom. This is especially common when medical records contain vague references or post death charting.
What matters legally:
Whether the insured was actually diagnosed at the time of application
Whether the application question was clear and unambiguous
Whether the alleged omission would have changed underwriting decisions
Medical nuance matters, and insurers often oversimplify complex records to justify denial.
5. Missing or Disputed Beneficiary Designations
Claims can also be delayed or denied when insurers allege that no valid beneficiary designation exists or that competing claims may arise. In these cases, insurers may attempt to shift responsibility to probate courts or file interpleader actions.
Beneficiaries should know:
Insurers are not permitted to deny claims simply because administration is inconvenient
Courts look at intent, not just form documents
Payment to the wrong party can be legally challenged
How the $1.3 Million Lincoln Financial Claim Was Resolved
In this case, Lincoln Financial initially denied payment based on a combination of application review and post claim investigation findings. After a detailed legal review, our firm identified critical flaws in the insurer’s reasoning, including misapplication of policy language and improper reliance on selective records.
By challenging the denial directly, presenting supporting documentation, and applying pressure through formal legal channels, the claim was ultimately resolved and the full $1,300,000.00 death benefit was paid.
Do Not Accept a Life Insurance Denial at Face Value
Life insurance denials are often framed as final decisions, but in reality many are overturned through appeals or litigation. Insurers rely on beneficiaries being overwhelmed, uninformed, or unwilling to challenge complex explanations.
If you are facing a denied life insurance claim, especially one involving a significant policy value, legal review is critical. The difference between acceptance and action can mean the difference between nothing and the full benefit your loved one intended you to receive.