Our life insurance attorneys recently resolved a $1.1 million denied AIG claim after the insurer accused the policyholder of misrepresentation and told the beneficiary there would be no payout. With the right evidence and legal strategy, the family recovered the full death benefit.
Misrepresentation denials are some of the most common, and some of the most aggressively litigated, because insurers often treat “inaccurate” and “material” as the same thing. They are not the same. Many of these denials can be overturned once you force the insurer to prove its case under the policy terms and the governing law.
In this blog, we explain what AIG and other insurers mean by “misrepresentation,” why these denials happen, what evidence actually matters, and the best steps to take after a denial.
Why AIG and Other Insurers Deny Claims for “Misrepresentation”
A misrepresentation denial usually means the insurer believes the policyholder gave an inaccurate answer on the life insurance application. The insurer then claims it would have issued the policy differently if it had known the “truth.”
These denials tend to fall into a few recurring categories.
1. Health history and treatment questions
Insurers often focus on questions about diagnoses, doctor visits, medications, symptoms, and prior testing. After death, they pull medical records, pharmacy histories, and sometimes prior insurance applications to compare them to the answers on the application.
Common examples insurers seize on include:
A prior doctor visit that was not listed
A prescription that appears in pharmacy records
A diagnosis recorded in a chart that the policyholder may not have understood
A referral, lab test, or imaging study that was never followed by a confirmed diagnosis
2. Tobacco and nicotine use
Nicotine issues are a major trigger for contestability investigations. Insurers look for references to smoking in medical records, and they may treat vaping, nicotine gum, or smokeless tobacco as “tobacco use” depending on how the question was written.
3. Alcohol, drugs, and mental health treatment
Applications frequently ask about alcohol abuse, drug use, counseling, anxiety, depression, or related prescriptions. Insurers sometimes overreach by treating a single medication or a short course of treatment as proof of “substance abuse” or “dependency” when the records do not support that claim.
4. Occupation and hazardous activities
Some applications ask about aviation, scuba, climbing, racing, or other high risk activities. Insurers may try to use a hobby, a license, or even a one time activity as grounds for a denial if it was not disclosed.
“Misrepresentation” Is Not Automatically a Valid Denial
A key point beneficiaries should understand is this:
An insurer does not win simply by finding a difference between a medical record and an application answer.
In many cases, the insurer must prove more than “this answer was not perfectly accurate.” Depending on the state law and policy language, the insurer often needs to prove that the statement was material, meaning it would have affected issuing the policy, the premium rate, or the coverage terms.
Also, many denials depend on timing. If death occurs within the contestability period, insurers investigate more aggressively. If death occurs outside that period, the insurer’s ability to rescind the policy may be limited unless it can prove a higher level of wrongdoing under the applicable rules.
The Contestability Period and Why It Matters
Most life insurance policies include a contestability period, commonly two years from the policy issue date. During that time, the insurer reviews the application closely if the insured dies, and it may attempt to rescind the policy for alleged misrepresentation.
That does not mean the insurer can deny for any mistake.
What often gets litigated is:
Whether the application question was clear
Whether the answer was actually false under a fair reading
Whether the issue was material
Whether the insurer is relying on incomplete records
Whether an agent, broker, or third party contributed to the alleged mistake
A lot of “misrepresentation” denials collapse when you force the insurer to identify the exact question, the exact answer, the exact record it relies on, and why that difference would have changed underwriting.
How These Denials Actually Get Overturned
When we resolve misrepresentation denials, the winning approach usually comes from building pressure on the insurer’s weak points, backed by documents.
Here are the defenses that frequently matter in real cases.
The application question was vague or overly broad
If the question is unclear, and reasonable people could interpret it differently, insurers often have a harder time justifying rescission.
The medical record is not the same as a confirmed diagnosis
Medical charts can contain “rule out” diagnoses, suspected conditions, or coding shortcuts used for billing. Insurers sometimes treat those as confirmed conditions when they are not.
The issue was not material to underwriting
Even if something was omitted, the insurer still has to show why it mattered. Many omissions are minor and would not have changed issuing the policy or pricing it.
The insurer is ignoring what was actually disclosed
Sometimes the insured disclosed the condition to an agent, disclosed it during a phone interview, or the insurer had enough information to investigate at underwriting and chose not to.
Agent or application handling errors
It is not rare for an agent to:
Pre fill answers
Reword questions
“Summarize” medical history incorrectly
Rush an applicant through an application
Submit an application with missing context
Those facts can be critical, especially when the beneficiary has emails, texts, or witness evidence showing what was discussed.
What to Do After a Misrepresentation Denial
If AIG or any insurer denies a claim based on misrepresentation, the steps you take early can determine whether you recover the full benefit.
1. Demand the complete written denial and the exact policy documents
Request:
The denial letter in full
The full policy, including endorsements and riders
The application, including any supplemental forms
Any recorded statements or phone interviews
Any underwriting notes or investigation summaries the insurer used
If the insurer will not produce what it relied on, that is a red flag.
2. Identify the exact alleged misstatement
Do not accept vague explanations like “the insured failed to disclose medical history.” Make the insurer identify:
The precise question on the application
The precise answer provided
The precise record the insurer claims contradicts that answer
The date and context of that record
3. Obtain the complete medical and pharmacy records yourself
Insurers sometimes rely on selective excerpts. Get the full records, including:
Primary care records
Specialist records
Hospital and ER records
Lab and imaging reports
Medication history and prescribing notes
Often the broader record tells a very different story than the insurer’s cherry picked excerpt.
4. Watch deadlines and the policy type
If the policy is employer provided, ERISA deadlines can apply and the appeal record becomes extremely important. If it is an individual policy, state law deadlines and procedures apply.
Either way, move quickly and treat every deadline as real.
5. Build a targeted rebuttal, not a generic appeal
A strong appeal does not “argue fairness.” It answers the insurer’s claim point by point with supporting documents. The best appeals usually include:
A clear timeline
The exact application language
The exact medical record language
Proof the issue was not material
Proof the insurer misunderstood the facts or overreached
6. Involve a life insurance attorney early
Misrepresentation denials are document driven. An attorney can:
Force production of the insurer’s file
Identify the governing standards and burden of proof
Pin down inconsistencies in underwriting logic
Prepare the appeal to preserve litigation options if needed
Push the case toward reversal or settlement when the denial is weak
Why This AIG Denial Was Reversed
In misrepresentation cases like the $1.1 million AIG claim we resolved, insurers often start from the assumption that any discrepancy equals rescission. Once the beneficiary challenges the denial with real records, the insurer frequently discovers it cannot prove what it claimed, or cannot prove it was material, or cannot justify its interpretation of the application and medical history.
That is when the leverage shifts, and that is when denials get reversed.
If AIG Denied Your Claim for Misrepresentation
If your life insurance claim was denied based on alleged misrepresentation, do not assume the insurer is right. These denials are commonly overstated, and many are reversible with the right evidence and strategy.