Can a Life Insurance Company Deny a Claim After Two Years?
Whether a life insurance company can deny a claim after two years depends on the specific circumstances and terms of the policy. Most life insurance policies include a contestability clause, which gives the insurance company the right to investigate and deny claims within the first one to two years after the policy is issued. During this period, if the insurer uncovers any material misrepresentations, omissions, or fraudulent information on the application, it may void the policy and deny the claim altogether. Once the contestability period has passed—typically after two years—the insurer generally cannot deny a claim based on misstatements or omissions on the application, assuming the policyholder is still living at the end of that period and premiums have been continuously paid. However, there are still exceptions where a denial can happen beyond the two-year mark. If the insured dies due to an excluded cause of death or the policy contains specific limitations, the insurance company may lawfully withhold payment even after the contestability period ends. Understanding these rules is critical to determining whether a claim denial is valid—or if legal intervention is warranted.
Top 10 Reasons Life Insurance Claims Are Denied
Life insurance claim denials can stem from many factors, but here are ten of the most common reasons insurance companies use to deny paying out the death benefit:
Non-disclosure or misrepresentation on the application: If the policyholder provides false or misleading information when applying—such as failing to disclose a smoking habit, pre-existing condition, or criminal record—the insurer may argue that the policy was obtained under false pretenses and deny the claim.
Suicide within exclusion period: Most policies contain a suicide clause stating that no benefit will be paid if the insured dies by suicide within the first one or two years. After this period, suicide is typically covered, but timing is crucial.
Excluded causes of death: Some policies explicitly exclude deaths resulting from risky behavior or criminal acts. For example, if the insured dies during an illegal drag race or while committing a felony, the claim could be denied.
Policy lapse due to nonpayment: A policy must be active and in force for a claim to be valid. If premiums were missed and not paid during the grace period, the insurer may claim the policy lapsed before death occurred, resulting in no payout.
Death during the contestability period with misrepresentation: If the insured dies within the first two years of the policy and the insurer finds any errors or omissions on the application during claim review, they may rescind the policy and refund the premiums instead of paying the full benefit.
Death while overseas: Some policies limit or exclude coverage for deaths that occur outside of the U.S. If the insured dies while living or traveling abroad and the policy has such an exclusion, the insurer might deny the claim outright.
Undisclosed pre-existing medical conditions: If the insured had a serious health issue, such as cancer or heart disease, and failed to disclose it on the application, and that condition later causes their death, the insurer may deny the claim—especially if discovered during the contestability period.
Fraud or self-inflicted harm: If there is evidence the insured staged their death or died in an intentional act to trigger the policy for someone else's benefit, the insurer will likely deny the claim and may report the incident for criminal investigation.
Beneficiary disputes: If multiple individuals claim to be rightful beneficiaries, or if a will or divorce contradicts the policy's beneficiary designation, the insurer may delay or withhold payment until the dispute is resolved, often through litigation or interpleader.
Policy limitations and exclusions: Every life insurance policy has fine print. If the death falls under a category not covered—such as certain aviation accidents, acts of war, or specific illnesses—the claim may be denied even years after the policy was issued.
Understanding your rights and the insurer's responsibilities is critical when facing a denied claim. Denials aren't always justified, and insurance companies sometimes rely on technicalities or vague policy language to avoid paying. If you’re facing a denied claim after two years—or at any time—our experienced life insurance attorneys can help you dispute the decision and recover the benefits your loved one intended for you to receive.
Contact Us If Your Life Insurance Claim Was Denied
We’ve helped thousands of families recover denied life insurance benefits, including those wrongfully denied after the contestability period. Our legal team understands the nuances of life insurance litigation and knows how to challenge insurer excuses ranging from misrepresentation to alleged policy lapse. If your claim was denied, don’t accept the insurer’s decision without getting a second opinion. Call us today at 800-330-2274 for a free consultation.
FAQ: Denied Life Insurance Claims After Two Years
Can a life insurance company deny a claim after the contestability period ends?
Yes, but not based on application misstatements. Once the contestability period passes, the insurer usually cannot deny a claim due to inaccuracies in the application, but they can still deny it for exclusions like suicide, fraud, or lapse in coverage.
What is the contestability period in life insurance?
The contestability period is typically the first one or two years after a policy is issued. During this time, insurers have broad authority to review and deny claims based on misstatements or omissions.
Is a suicide covered after the contestability period?
In most policies, yes. Suicide is generally excluded for the first two years, but once that period passes, suicide is typically covered like any other cause of death.
Can a claim be denied due to non-payment if the policyholder died after two years?
Yes. If the policy lapsed due to unpaid premiums—even after two years—coverage may no longer be in force, and the insurer may deny the claim.
What if the policyholder had a pre-existing condition not disclosed?
If death occurs during the contestability period, the insurer may deny the claim for material non-disclosure. After that period, it’s much harder for them to deny based on pre-existing conditions.
Can death while overseas result in a denied claim?
Yes, if the policy has exclusions for foreign travel or residency. Some policies restrict coverage outside the U.S., especially in high-risk regions.
What happens when there’s a dispute among beneficiaries?
The insurer may file an interpleader action in court, depositing the funds and allowing a judge to decide who receives the payout. This can delay payment significantly.
Can a life insurance claim be denied for criminal activity?
Yes. If the insured died while committing a felony or engaging in illegal activity, the policy may exclude coverage for that event.
Does the insurer need proof to deny a claim?
Absolutely. They must provide a written explanation and evidence supporting their denial. If they don’t, the denial may be unlawful.
Can I sue the life insurance company for a denied claim?
Yes. If your claim was wrongfully denied, an attorney can help you file a lawsuit to recover the death benefit, interest, and possibly bad faith damages.
Is a lapse in coverage always final?
Not necessarily. If the lapse was due to insurer error or miscommunication, an attorney might help you get the policy reinstated and claim paid.
What if my loved one’s policy was missing or incomplete?
You can contact the insurer or use the NAIC Life Insurance Policy Locator to search for coverage. Legal help may be needed if the insurer refuses to cooperate.
Do life insurance companies deny claims often?
Unfortunately, yes. Many legitimate claims are denied for technical or questionable reasons. Legal review can uncover whether the denial is valid.
Can an old misstatement void a policy after two years?
Usually not. After the contestability period, misstatements can’t be used to rescind the policy unless fraud is proven.
What is a material misrepresentation?
It’s a false statement that would have affected the insurer’s decision to issue the policy. Common examples include undisclosed health issues or risky behaviors.
Can death from a high-risk hobby void the policy?
It depends. If the policy excludes coverage for specific activities like skydiving or scuba diving, and the death occurred during such an activity, the claim may be denied.
Does it help to have legal representation?
Yes. An experienced life insurance attorney can challenge wrongful denials, negotiate with the insurer, and file suit if necessary to secure your benefits.
What is an interpleader lawsuit?
It’s a legal action where the insurer asks the court to decide who should receive the death benefit when multiple people claim it. This often happens in beneficiary disputes.
Can the insurer delay payment indefinitely?
No. They must pay claims in a reasonable time or provide a valid reason for delay. Excessive delays may indicate bad faith.
What should I do if I received a denial letter?
Don’t accept it at face value. Contact a life insurance attorney immediately to review the policy, the denial letter, and your legal options.