Our attorneys recently resolved a $2 million life insurance claim after an initial denial, and cases like these remind us just how critical it is to follow proper procedures—and to be prepared for the tactics insurers use to avoid payment.
If you’re preparing to file a life insurance claim or you’ve already been denied, this guide will help you understand the most common pitfalls and what you can do to fight back. If you need help with denied life insurance in Illinois call us.
Why Life Insurance Claims Get Denied
Life insurance companies don't pay claims automatically. They investigate every detail of the policy and the insured's death—and if they find any discrepancy, no matter how small, they may try to avoid paying. Below are the most common reasons for claim denials, along with real examples that show how these issues arise in practice.
Incorrect Contact Information
When a policyholder moves or changes phone numbers without updating the insurer, critical notices may go undelivered. If the insurer can’t reach the insured or beneficiary, it can result in a claim denial or policy lapse.
Example: A beneficiary in Illinois was denied benefits after the insurer sent lapse notices to an old address. The policyholder had moved out of state, but failed to notify the company. Because of this, the insurer claimed they had properly terminated the policy and refused to pay.
Missing or Incomplete Documentation
If even one required document—such as the long-form death certificate, photo ID, or policy paperwork—is missing, the insurer may refuse to process the claim.
Example: In Arizona, a widow filed a claim using a short-form death certificate that didn’t list cause of death. The insurer delayed payment for months until the long-form version was submitted, and even then, they attempted to deny based on contestability provisions. Legal assistance helped push the claim through.
Incorrect Age on the Application
Age affects premium rates and eligibility. If the insured’s age was misstated, the insurer may reduce the payout—or rescind the policy altogether.
Example: A Florida applicant listed his age as 55 when he was actually 60, in an attempt to get a lower premium. After his unexpected death within the contestability period, the insurer conducted a routine investigation, discovered the discrepancy, and voided the policy for misrepresentation.
Undisclosed Pre-Existing Medical Conditions
Failure to disclose medical history is one of the most common denial reasons. If the insured dies during the contestability period (typically the first two years), the insurer will investigate the application for omissions.
Example: A New Jersey woman died of diabetic complications just months into her policy. Her application made no mention of diabetes, despite years of treatment. The insurer denied the claim on the basis of material misrepresentation, arguing that coverage would never have been issued had the truth been known.
Unpaid Premiums and Policy Lapse
Even long-standing policies can lapse due to a single missed payment. If coverage ends before death occurs, there’s often no legal obligation to pay—unless the lapse was caused by administrative error or insufficient notice.
Example: In Texas, a life insurance claim was denied after the insured missed one premium due to a closed bank account. The insurer argued the grace period expired, and the policy was void. However, it was later discovered the insurer hadn’t sent proper lapse notifications. Legal action led to a reversal and full payment.
Failure to Disclose Risky Activities
Some applications ask whether the insured engages in activities like skydiving, scuba diving, or flying small planes. If the insured answers falsely and later dies during one of those activities, the insurer may deny the claim.
Example: A man in Colorado died in a skydiving accident. Although he was a licensed jumper, he had marked “no” to skydiving on his application. The insurer denied the claim under a misrepresentation clause, citing elevated risk that would have changed the policy terms.
Contestability Investigations
If the policyholder dies within two years of obtaining the policy, insurers can conduct a full investigation—even if premiums were paid on time. They may review medical records, pharmacy logs, or past insurance applications to uncover misstatements.
Example: A father passed away from cancer less than a year after buying coverage. The insurer obtained pharmacy records showing prior treatments for lung issues that had not been disclosed on the application. The claim was denied, citing failure to disclose relevant medical history.
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