One of the most common reasons life insurance claims are denied is alleged misrepresentation on the application.
The insurer reviews medical records after death and claims the insured failed to disclose something important. The carrier may attempt to rescind the policy entirely, arguing that coverage never should have been issued.
But not every inaccurate answer is fraud.
There is a critical legal difference between a material misrepresentation and an innocent mistake. That distinction often determines whether the insurer can lawfully deny the claim.
Here is what insurers must prove and where these cases are won or lost.
What Insurers Mean by Misrepresentation
In most states, a life insurance company can rescind a policy if it proves:
• A false statement was made on the application
• The statement was material to the risk
• The insurer relied on that statement when issuing the policy
Some states also require proof that the misstatement was made knowingly or with intent to deceive. Others allow rescission for material misstatements even if they were not intentional.
The exact standard depends on state law and the policy language.
The Difference Between a Lie and a Mistake
Applications often contain broad health questions such as:
Have you ever been treated for a heart condition
Have you consulted a physician in the past five years
Have you been diagnosed with any disorder of the nervous system
Applicants frequently answer based on memory, understanding, or what they believe is relevant.
An innocent mistake might include:
• Forgetting a minor doctor visit years earlier
• Not understanding a technical medical term
• Failing to disclose a condition the applicant did not know existed
• Misstating dates or medication names
A misrepresentation, in contrast, involves knowingly providing false information or concealing a significant condition.
The insurer bears the burden of proving the difference.
What “Material” Really Means
Materiality is central.
A statement is material if the insurer would have:
• Declined the application
• Issued the policy at a higher premium
• Limited coverage
• Delayed approval pending further underwriting
Insurers often rely on internal underwriting guidelines to argue materiality.
However, those guidelines must be applied consistently. If similar applicants were approved with comparable medical histories, that can weaken the carrier’s position.
Post Claim Underwriting
Many misrepresentation disputes arise from post claim underwriting.
Instead of fully investigating medical history at the time of application, the insurer issues the policy and collects premiums. Only after a death claim is filed does the company dig deeply into medical records.
If it finds discrepancies, it attempts rescission.
Courts sometimes view this practice skeptically, especially if the application questions were vague or ambiguous.
Ambiguous Questions Favor the Insured
If an application question is unclear, courts often interpret ambiguity in favor of coverage.
For example:
• Did the question clearly define the medical condition
• Did it specify a time frame
• Did it ask about symptoms versus formal diagnoses
• Did it require disclosure of minor or resolved conditions
If reasonable people could interpret the question differently, proving intentional misrepresentation becomes more difficult.
The Importance of Medical Records
Insurers typically rely on medical records to support rescission.
But medical records are not always precise. They may include:
• Preliminary diagnoses later ruled out
• Clerical errors
• Patient reported symptoms that were never confirmed
• Conditions that resolved without treatment
Context matters. A single chart entry does not automatically prove the applicant knowingly withheld material information.
Contestability Period Issues
Most life insurance policies contain a contestability period, often two years from issue. During that period, the insurer may investigate and rescind for material misstatements.
After the contestability period expires, rescission becomes far more difficult in many jurisdictions, especially absent fraud.
Timing can significantly affect the insurer’s burden.
What Insurers Must Actually Prove
To successfully rescind a policy based on misrepresentation, insurers generally must show:
• The answer was false
• The insured knew or should have known it was false, depending on state law
• The information was material
• The insurer relied on the answer in issuing the policy
Mere discrepancies are not enough.
The proof must connect the alleged misstatement to the underwriting decision.
The Bottom Line
Not every incorrect answer on a life insurance application justifies rescission.
There is a meaningful legal difference between intentional misrepresentation and an innocent mistake. Insurers bear the burden of proving materiality and reliance, and vague or ambiguous application questions can undermine their position.
If a claim is denied based on alleged misrepresentation, the denial is not automatically valid. The facts, the medical records, the application wording, and the governing state law all matter.