After a loved one dies, some beneficiaries receive a letter from the life insurance company titled reservation of rights.
The letter often sounds neutral or procedural. In reality, it is one of the most important warning signs in a life insurance claim.
Understanding what this letter means can help you avoid mistakes that insurers rely on later.
What Is a Reservation of Rights Letter
A reservation of rights letter is a notice from the insurance company stating that it is continuing to investigate the claim while reserving the right to deny it later.
In simple terms, the insurer is saying
we are not denying the claim yet
we are not accepting the claim either
The company is protecting its legal position.
Why Insurers Send Reservation of Rights Letters
Insurance companies do not send these letters in routine claims.
They are usually sent when the insurer sees a possible excuse to delay, limit, or deny payment.
Common reasons include
- death during the contestability period
- questions about medical history
- policy lapse or payment issues
- group life eligibility concerns
- cause of death issues
The letter allows the insurer to investigate without committing to coverage.
What the Letter Does Not Mean
A reservation of rights letter does not mean
- the claim is valid
- the claim will be paid
- the insurer is acting in your interest
It also does not mean the insurer has proven any wrongdoing.
It simply means the insurer is keeping its options open.
Why Reservation of Rights Matters After a Death
Once a reservation of rights letter is sent, everything you provide can be used to justify a denial later.
- Phone calls are documented.
- Written statements are preserved.
- Documents are scrutinized for inconsistencies.
Many denials rely heavily on information obtained after the reservation of rights was issued.
How Insurers Use Reservation of Rights Against Beneficiaries
In many cases, insurers use the investigation phase to
- look for inconsistencies in medical records
- reinterpret application answers
- build a misrepresentation argument
- justify delays
The letter gives the insurer time and leverage while the beneficiary waits.
Common Mistakes Beneficiaries Make After Receiving One
Many families assume the letter is routine and continue cooperating without caution.
Common mistakes include
- giving recorded statements
- providing explanations instead of documents
- guessing when answering questions
- resending documents with new comments
These mistakes can unintentionally strengthen a future denial.
What You Should Do If You Receive a Reservation of Rights Letter
If you receive this letter after a death, slow down.
- Do not assume the claim will be paid.
- Do not provide new statements casually.
- Do not accept delays without explanation.
Confirm exactly what the insurer is investigating and why.
Can a Claim Still Be Paid After a Reservation of Rights
Yes. Many claims are ultimately paid.
However, reservation of rights letters are often the first formal step toward a denial.
Early guidance can prevent the insurer from creating a one sided record.
Why Timing Is Critical
Insurers build their case during the investigation period, not after the denial.
Once a denial is issued, beneficiaries are forced to fight uphill using the record the insurer already created.
Understanding what a reservation of rights means helps protect you during the most vulnerable phase of the claim.