Our firm recently overturned a one hundred thirty thousand dollar life insurance claim denial issued by Banner Life, securing a full payout for the beneficiary. The insurer denied the claim during the contestability period, alleging misrepresentations in the original application. After a detailed review of the underwriting file, application materials, and medical and financial records, we demonstrated that the alleged discrepancies were immaterial and did not justify rescinding the policy.
This case highlights a recurring problem in life insurance litigation. Insurers routinely seize on minor or ambiguous application issues to deny otherwise valid claims, especially when a death occurs within the first two years of coverage.
How Contestability Period Denials Actually Work
Most life insurance policies contain a contestability clause that allows the insurer to review the application if the insured dies within the first two years after the policy is issued. During this window, the company may attempt to rescind the policy if it believes the insured made a material misrepresentation.
What insurers often omit from their denial letters is the legal standard they must meet. Not every mistake or omission qualifies as material. To lawfully deny a claim, the insurer must show that the alleged misstatement would have changed its underwriting decision. Minor errors, estimates, or omissions unrelated to the cause of death do not automatically justify nonpayment.
In the Banner Life case, the insurer treated a small application discrepancy as grounds to void the entire policy. That position did not hold up once the underwriting facts were examined closely.
Income Discrepancies and Inflated Materiality Claims
One of the most common contestability arguments involves income. Insurers use income disclosures to assess whether the amount of coverage is appropriate. If they believe the insured overstated earnings, they may argue the policy should never have been issued at that face value.
In this case, Banner Life alleged the insured misrepresented annual income. Our investigation showed the figure was a reasonable estimate based on variable earnings and that the difference was not large enough to affect underwriting approval. More importantly, Banner Life had access to verification tools during underwriting and chose to issue the policy anyway.
Courts are generally skeptical of income-based denials when the discrepancy is modest and the insurer had the opportunity to investigate before issuing coverage.
Failure to Disclose Other Policies
Another frequent trigger for contestability denials is the alleged failure to disclose existing life insurance policies. Applications often ask for a list of all active coverage so the insurer can evaluate total exposure.
Many insureds forget older or small policies, especially group plans or policies purchased decades earlier. In some cases, the policy referenced by the insurer had already lapsed or been replaced.
We have overturned denials where the omitted policy was inactive, minimal in value, or irrelevant to the underwriting decision. In the Banner Life matter, the insurer’s argument relied on assumptions rather than proof that the omission affected risk evaluation.
Medical History Omissions That Do Not Justify Denial
Health disclosures are another common battleground. Insurers often comb through years of medical records after a death to find any condition that was not explicitly listed on the application.
The legal question is not whether something was omitted, but whether it mattered. Minor procedures, resolved conditions, or vague symptoms are frequently mischaracterized as material misrepresentations.
In similar cases we have handled, insurers denied claims over omitted outpatient procedures, brief counseling visits, or conditions that were never formally diagnosed. When the omitted information had no connection to the cause of death and would not have altered underwriting, those denials were reversed.
Agent and Application Handling Errors
Some denials originate not with the insured, but with the insurer’s own agent. Rushed applications, auto-filled forms, and unchecked entries can result in incorrect answers being submitted without the applicant’s knowledge.
Courts consistently hold that insurers cannot benefit from their own agent’s mistakes. If an agent filled in information incorrectly, failed to clarify questions, or submitted incomplete paperwork, the insurer may be barred from relying on those errors to deny a claim.
In the Banner Life case, our review showed that underwriting proceeded despite information that the insurer later claimed was disqualifying. That inconsistency undermined the denial.
How We Challenged the Denial Successfully
To reverse this denial, our team focused on three key points:
• The alleged misstatement was minor and not material
• Banner Life had sufficient information during underwriting to assess risk
• The discrepancy had no relationship to the cause of death
We obtained underwriting guidelines, internal notes, and policy issuance records showing the insurer accepted the risk with full knowledge of the relevant facts. Once confronted with its own documentation, Banner Life reversed the denial and paid the claim.
Why Beneficiaries Should Not Accept Contestability Denials at Face Value
Contestability period denials are often framed as final and non-negotiable. In reality, many are based on aggressive interpretations that do not survive legal scrutiny.
Insurers rely on the assumption that beneficiaries will not challenge technical arguments during a period of grief. When those arguments are tested against underwriting standards, state insurance law, and contract principles, they frequently fail.
Final Takeaway
A contestability period denial does not mean the insurer is right. Minor application errors, estimates, or omissions do not automatically void a life insurance policy. Insurers must prove materiality, and many cannot.
This one hundred thirty thousand dollar Banner Life case was paid in full because the denial was legally indefensible. If your claim was denied based on alleged misrepresentations, especially within the first two years of coverage, it is worth having the decision reviewed. Many of these denials can be overturned with a focused legal challenge.