Our top life insurance attorneys recently resolved a $1.1 million denied claim after an insurer wrongly accused the policyholder of misrepresentation. The beneficiary was initially told there would be no payout, but with legal help, the family received the full amount. We understand how devastating it is when a claim is rejected, and we also know how often these denials can be overturned. If you have Connecticut life insurance claim issues call us.
In this blog, we explain the most common reasons life insurance claims are denied, what steps you can take after a rejection, and how to pursue the benefits your family is entitled to receive.
Why Life Insurance Claims Are Denied
Insurance companies may deny claims for many different reasons. While some denials are supported by the policy terms, others are based on errors, incorrect assumptions, or questionable interpretations. These are some of the most common reasons for a denied claim, along with real examples from past cases.
Policy Lapse from Missed Payments
One of the most frequent reasons for denial is nonpayment. If a policyholder misses payments and does not make them up within the grace period, typically between 30 and 60 days, the policy can be canceled and coverage ends.
Example: We handled a case involving a retired teacher whose family was denied a $500,000 payout. The insurer claimed the policy had lapsed, but we discovered that notices were sent to an outdated address. Once we presented proof of the mailing error, the claim was paid.
Death Not Covered by the Policy
Some policies include exclusions that limit coverage based on the cause of death. These might apply to suicide during the first two years of the policy, deaths involving alcohol or controlled substances, or activities like skydiving or rock climbing.
Example: A woman contacted us after her husband died in a motorcycle crash. The insurer claimed the accident was excluded due to reckless behavior. We gathered evidence showing he followed all traffic laws and that the exclusion did not apply. The insurer reversed its decision and paid the full benefit.
Disputes over the Beneficiary
Claims are often delayed or denied when the insurer questions whether the listed beneficiary is entitled to the proceeds. This may happen when the policy was not updated after a divorce or when multiple people claim the right to the payout.
Example: Two adult children were denied payment after their father passed away with his former spouse still listed on the policy. Under state law, divorced spouses were no longer considered valid beneficiaries unless the policyholder reaffirmed the choice. We used that law to secure the payout for the children.
Loss of Employer-Based Coverage
Group life insurance provided through an employer typically ends when the employee leaves the company. If the employee does not convert or continue the policy privately, there is no coverage in place.
Example: One family was denied a $300,000 claim because the policyholder had been laid off months earlier. We uncovered that the employer failed to notify him of his right to continue the policy on his own. The insurer agreed to settle after we presented the evidence.
What to Do When a Life Insurance Claim Is Denied
A denial is not the end of the road. Many denials are reversed when beneficiaries take the proper steps. Here is what to do if your claim was rejected.
Request a Full Explanation and Review the Policy
Start by asking for a written denial letter that clearly explains the reason for the decision. Also request a copy of the full policy and any supporting documents used by the insurer. You need this information to understand what went wrong.
Carefully Analyze the Denial
Compare the denial letter with the policy language. Look for vague or misapplied clauses. Many policies are written in confusing terms, and insurers may rely on those terms to justify their position. A close review often reveals weaknesses in their explanation.
Collect Additional Documentation
Gather any paperwork that supports your position. This might include payment records, employment information, medical history, or any communications with the insurance company. The more facts you have, the stronger your appeal can be.
Get Help from a Life Insurance Attorney
If the insurance company refuses to reconsider, or if the denial seems unfair, contact a life insurance attorney. A lawyer can assess your case, explain your rights, and take over the appeal process. In many cases, legal intervention leads to a reversal or a settlement.
Example: A client was denied a $750,000 claim due to an alleged failure to disclose a health condition. We found proof that the condition had been disclosed during the application process. The insurer dropped the denial and paid the full amount after we got involved.