When a life insurance claim is denied after a death, the starting point of any lawsuit is breach of contract. The insurer failed to pay benefits owed under the policy. But breach of contract alone limits recovery to the policy proceeds, plus interest in some cases.
Bad faith claims go further. They focus on how the insurer handled the claim and whether the denial or delay was unreasonable. Proving bad faith opens the door to additional damages that are not available in a simple contract case.
The Difference Between Breach of Contract and Bad Faith
Breach of contract asks a narrow question. Was coverage owed under the policy terms.
Bad faith asks a broader question. Did the insurer act unreasonably, dishonestly, or without proper cause when handling the claim.
An insurer can technically be wrong about coverage and still avoid bad faith if its position was reasonable. Bad faith requires proof that the insurer crossed that line.
Why Bad Faith Matters in Life Insurance Cases
Life insurance is different from many other insurance products. The claim arises after a death. Beneficiaries are often grieving, financially vulnerable, and dependent on timely payment.
Courts recognize this imbalance. When insurers exploit it through delay, excessive investigation, or manufactured defenses, bad faith damages are designed to punish and deter that conduct.
What You Must Prove Beyond Breach of Contract
To recover bad faith damages, a plaintiff typically must prove more than nonpayment. While standards vary by state, several core elements appear consistently.
First, the insurer lacked a reasonable basis for denying or delaying the claim.
Second, the insurer knew or should have known that its conduct was unreasonable.
Third, the insurer failed to conduct a fair and proper investigation before denying benefits.
These elements focus on conduct, not just outcome.
Unreasonable Delay as Bad Faith
Delay is one of the most common forms of life insurance bad faith.
Examples include repeated requests for documents already provided, unnecessary recorded statements, open ended investigations with no clear purpose, and long periods of inactivity.
If discovery shows that the insurer had enough information to pay the claim but chose to wait, delay alone can support bad faith damages even if payment eventually occurs.
Improper or Biased Investigations
Bad faith often appears in how the investigation was structured.
Selective review of medical records, ignoring favorable evidence, or relying on third party vendors to build a denial narrative can demonstrate unreasonable conduct.
Courts scrutinize investigations that seem designed to find a reason to deny rather than to determine whether coverage exists.
Shifting or Manufactured Denial Reasons
An insurer that changes its justification over time exposes itself to bad faith risk.
If the denial letter cites one reason but litigation reveals reliance on different internal reasoning, that inconsistency can support an inference that the original denial was not grounded in a fair evaluation.
Bad faith is often proven by what the insurer did not disclose at the time of denial.
Failure to Follow Internal Policies
Insurers operate under internal claims handling guidelines. When those rules are ignored, it can support a finding of bad faith.
Discovery frequently reveals missed deadlines, skipped supervisory reviews, or deviations from standard procedures. Insurers are expected to follow their own rules when handling life insurance claims.
Types of Bad Faith Damages in Life Insurance Cases
Bad faith damages vary by jurisdiction, but they often extend well beyond the policy amount.
These damages may include emotional distress, economic losses caused by delay, statutory penalties, interest beyond contractual rates, and attorneys’ fees where permitted.
In extreme cases, punitive damages may be available when the insurer’s conduct shows reckless disregard for the rights of beneficiaries.
Why Punitive Damages Are Sometimes Available
Punitive damages are not automatic. They require proof that the insurer’s conduct was more than negligent.
Evidence of systematic delay practices, post claim underwriting, intentional misrepresentation of policy terms, or pressure to deny high value claims can support punitive exposure.
Punitive damages exist to change behavior, not just compensate loss.
How Bad Faith Is Proven in Practice
Bad faith cases are rarely proven by the denial letter alone.
They are built through discovery of the claim file, internal communications, underwriting records, and third party vendor relationships. The strongest cases show a pattern of conduct rather than a single mistake.
In life insurance litigation, what the insurer did behind the scenes often matters more than what it said on paper.
Final Takeaway
Breach of contract establishes entitlement to benefits. Bad faith examines whether the insurer acted fairly while deciding whether to pay them.
When an insurer denies or delays a life insurance claim without a reasonable basis, ignores evidence, or manipulates the investigation, bad faith damages may be available.
Understanding what must be proven beyond breach of contract is critical for beneficiaries seeking full accountability after a wrongful life insurance denial.