How to Appeal a Life Insurance Denial
Dealing with a life insurance claim denial is devastating, especially during an already difficult time. According to industry estimates,10-20% of life insurance claims face initial rejection or delay. This guide shows you how to fight back and get the benefits you deserve.
Key Statistics: Life Insurance Denials
- 10-20% denial/delay rate — Estimated percentage of life insurance claims facing initial rejection (Industry estimates)
- ~40% appeal success rate — Approximate percentage of denied claims overturned on appeal (Legal research)
- 2 years — Contestability period during which claims can be investigated for misrepresentation (NAIC)
- 30-60 days — Most states require payment within this period after complete claim submission (NAIC)
Why Life Insurance Claims Get Denied
According to the American Council of Life Insurers (ACLI) and legal experts, life insurance claims are most commonly denied for:
Material Misrepresentation
Undisclosed health issues, smoking status, or lifestyle factors discovered during the 2-year contestability period. This is the #1 reason for denials.
Policy Lapse or Non-Payment
Premium payments missed, bank errors, or unclear grace period notices. Always verify your policy is active.
Suicide Exclusion
Most policies exclude suicide within the first 2 years. After this period, suicide is typically covered.
Beneficiary Disputes
Conflicting beneficiary designations after divorce or estate changes. Insurers may file an interpleader (court deposit) until resolved.
Accidental Death Disputes
AD&D policies have narrow definitions of "accident." Approximately 33% of accidental death claims are disputed over these definitions.
Understanding the Contestability Period
What is the Contestability Period?
According to the National Association of Insurance Commissioners (NAIC), the contestability period is typically the first 2 years after a life insurance policy is issued. During this time, insurers can investigate claims and deny coverage for material misrepresentation on the original application.
If the insured died within the contestability period: The insurer will likely investigate the application for any undisclosed health conditions, lifestyle factors, or other misrepresentations. Common targets include:
- Undisclosed pre-existing conditions (cancer, heart disease, diabetes)
- Smoking or tobacco use
- Dangerous hobbies (skydiving, racing)
- Criminal history
- Previous insurance denials
If the policy was active for more than 2 years: The insurer generally cannot contest the claim based on misrepresentation, unless fraud is proven. This significantly improves your chances of approval.
Step-by-Step: How to Appeal a Life Insurance Denial
Request the Complete Claim File
Under state law, you have the right to see everything the insurer relied on to deny your claim. Request the complete file including the application, medical records, investigator's report, and any expert opinions.
Identify the Specific Denial Reason
The denial letter must state the specific reason. Common reasons include misrepresentation, policy lapse, or exclusion. Your appeal strategy depends entirely on addressing this specific reason.
Gather Evidence to Counter the Denial
For misrepresentation claims, obtain medical records showing the insured didn't know about the condition or that it wasn't material. For lapse claims, gather evidence of premium payments or bank statements.
Submit a Formal Written Appeal
Send your appeal via certified mail with return receipt. Include all supporting documentation and a clear argument addressing the denial reason. Keep copies of everything.
Consider Legal Action If Necessary
If your appeal is denied, consult with a life insurance attorney. Many work on contingency (no fee unless you win). You can also file a complaint with your state insurance commissioner.
Sample Life Insurance Appeal Letter
Frequently Asked Questions: Life Insurance Denials
What percentage of life insurance claims are denied?
While official denial rates aren't publicly disclosed by insurers, according to industry analysts, an estimated 10-20% of life insurance claims face initial rejection or delay. Approximately 40% of appealed denials are eventually overturned.
How long does a life insurance company have to pay?
According to the NAIC, most states require life insurance companies to pay claims within 30-60 days of receiving complete documentation. If they need more time to investigate, they must notify you in writing.
Can I sue a life insurance company for denying my claim?
Yes, you can sue for wrongful denial, especially in cases of bad faith. You typically must exhaust internal appeals first. Many life insurance attorneys work on contingency — meaning no fee unless you win.
What if the insured lied on their application?
If the policy is past the 2-year contestability period, the insurer generally cannot deny based on misrepresentation (except for fraud). If within the contestability period, you may still appeal by showing the misrepresentation was unintentional or not material to the risk.
Related Appeal Guides
About This Guide
This guide is provided for educational purposes only and does not constitute legal advice. Life insurance claim disputes can be complex — consider consulting with a life insurance attorney for personalized guidance.
Statistics cited are from publicly available sources including the ACLI, NAIC, and legal research firms.