A life insurance policy is a binding legal contract. The policyholder agrees to pay premiums and provide accurate information. In return, the insurance company is legally required to investigate claims fairly, communicate honestly, and pay valid claims promptly.
When an insurer delays, stonewalls, or denies a claim without a legitimate basis, it may be acting in bad faith. These practices are not just unfair. In many cases, they violate state insurance laws. Below are common warning signs that a life insurance company may be handling a claim in bad faith.
1. Poor Communication or Lack of Transparency
Bad faith often begins with silence or vague responses. Warning signs include:
Failing to acknowledge receipt of a claim or documents
Ignoring emails or phone calls for weeks at a time
Repeatedly stating the claim is “under review” with no explanation
Refusing to explain what information is missing or what steps remain
Insurers have a duty to communicate clearly and within a reasonable time. When they do not, it may be an intentional delay tactic designed to frustrate beneficiaries.
2. Denying a Claim Without a Clear or Accurate Explanation
Insurance companies must provide a written denial that explains the exact reason for the decision and cites specific policy provisions. Bad faith may be present when:
The denial letter is vague or generic
The insurer misquotes or misapplies policy language
The stated reason does not match the facts
The insurer changes its explanation over time
Denials based on distorted interpretations or unsupported conclusions often signal an effort to avoid payment rather than a legitimate coverage dispute.
3. Unreasonable Delays After the Claim Is Approved
Some insurers approve claims but then delay issuing payment. This can be just as problematic as an outright denial.
Common red flags include:
Long delays after all requested documents have been submitted
Excuses that the payment is “processing” without a timeline
Pressure to accept a reduced payout to speed things up
Many states require insurers to pay claims within a defined period after approval. Unjustified delays may violate those laws and support a bad faith claim.
4. Attempting to Cancel or Modify the Policy After the Claim Is Filed
Post-claim underwriting is one of the most serious forms of bad faith. This occurs when an insurer tries to rescind or alter coverage after the insured has died.
Examples include:
Searching for unrelated application errors after the claim is filed
Alleging misrepresentation that had no connection to the death
Attempting to retroactively void the policy
In many jurisdictions, this conduct is unlawful. Insurers are expected to underwrite policies before issuing them, not after a claim arises.
5. Relying on Trivial or Irrelevant Issues to Justify Denial
Bad faith investigations often focus on insignificant discrepancies rather than material facts. These may include:
Minor clerical errors
Slight differences in medical records
Old or unrelated conditions
Technical mistakes that had no impact on underwriting
While insurers may investigate potential fraud, they cannot use minor inconsistencies as an excuse to deny an otherwise valid claim.
Why Legal Help Matters in Bad Faith Life Insurance Claims
Insurance companies have experienced claims teams and in-house lawyers whose job is to minimize payouts. Beneficiaries are often at a disadvantage without legal support.
A life insurance attorney can:
Analyze whether the insurer violated its legal duties
Demand the complete claim file and internal records
Challenge improper delays or denials
File a lawsuit to recover the death benefit
In cases involving bad faith, courts may also award additional damages, including interest, attorney fees, and in some cases punitive damages.
How to Protect Yourself if You Suspect Bad Faith
If you believe an insurer is acting improperly, take these steps:
Keep records of all communications and documents
Request all explanations in writing
Ask for a copy of the full policy and claim file
Do not accept a reduced settlement without legal review
Final Thoughts
Life insurance companies are required to act fairly and honestly. When they do not, beneficiaries are not powerless. Recognizing the signs of bad faith early can prevent unnecessary delays and protect your right to the full death benefit.
If a claim is being ignored, delayed, or denied without a legitimate reason, legal intervention may be the only way to hold the insurer accountable and force compliance with the law.