Life insurance policies provide financial protection for beneficiaries and peace of mind for the insured. Though there are many types of life insurance policies, the overall purpose of remains the same: protect the policy’s beneficiary from financial hardship in the event of the insured’s death.

  • The financial protection provided to a beneficiary is known as a “death benefit”. It is typically provided in the form of a lump-sum payment, though some policies provide beneficiaries with the option of receiving their death benefit in installments over a specified timeframe or in regular payments for the remainder of their life.

Regardless of the type of life insurance policy or form of death benefit payment, the last thing anyone wants to worry about when a loved one dies is whether his or her life insurance claim will be denied. Unfortunately, however, it’s not uncommon for life insurance companies to deny claims. In 2009 alone, over 5,000 life insurance claims were denied and nearly $372 million in death benefits were withheld from beneficiaries.

There are many reasons that can lead to a denial. One of the most common reasons for a life insurance company to deny a claim is because the insured failed to disclose a pre-existing condition during the process of purchasing their life insurance policy.

Why do life insurance companies need to be aware of pre-existing conditions?

When an individual applies for a life insurance policy, insurance companies investigate the applicant’s medical history in a process known as “medical underwriting”. The purpose of this process is to allow the insurance company to assess the level of risk associated with insuring the applicant and set the policy’s premiums accordingly. Many factors (such as age, demographics, etc.) affect the cost of a life insurance policy. However, certain medical conditions (such as cancer, heart disease, or diabetes) will significantly impact an insurance company’s decision whether to insure an individual and at what rates.

If the applicant fails to disclose a pre-existing condition, their life insurance premiums may be substantially lower, though this omission – intentional or accidental – puts their beneficiaries at risk of having their death benefit denied.

  • There are instances when an undisclosed pre-existing condition can rightfully disqualify a beneficiary from their death benefit. However, experts estimate that insurance companies wrongfully deny up to 40 percent of life insurance claims.

If you have submitted a life insurance claim that has been denied due to a pre-existing condition, continue reading to learn the six most important things your insurance company might not be telling you:

1) You always have the right to appeal an insurance company’s denial. Any time an insurance company issues a denial, they must notify you in writing and clearly state the reason for their denial. Your denial letter should also explain the insurance company’s specific process for submitting an appeal. If it does not, contact your insurance company to inquire about their appeals process and timeline and be sure to always keep detailed records of your communications.

2) Life insurance policies have a two-year “contestability period”. This refers to a two-year timeframe during which life insurance companies can investigate the insured’s initial application for omissions, mistakes, or fraud in a process known as retroactive or post claim underwriting. If your insurance company discovers an undisclosed pre-existing condition or other discrepancies during this time, your life insurance claim can be denied.

  • If death occurs during the contestability period, your life insurance claim may be delayed up to 12 months while your insurance company thoroughly examines the insured’s medical history.

3) Insurance companies can only deny a claim for “material misrepresentations. Insurance companies tend to be particularly fastidious about errors found during the contestability period. However, they can only deny your life insurance claim if they discover a mistake or an omission that would have caused them to charge a higher premium or reject the insured’s initial life insurance application altogether. Even unintentional mistakes can cause a life insurance claim to be rejected if it is considered a material misrepresentation.

4) Any undisclosed pre-existing condition can cause your life insurance claim to be denied. As long as it would have affected your insurance company’s decision to offer coverage, any pre-existing condition that is discovered during the contestability period can cause your life insurance claim to be denied – even if it is completely unrelated to the insured’s cause of death.

5) A policy’s contestability period will restart if premiums aren’t paid. Contestability periods usually end within two years after the insured first purchases their life insurance policy. However, it’s possible that a policy’s contestability period had to be restarted from the beginning of its two-year timeframe. This occurs if the insured fails to make their premium payments, which causes the life insurance policy to essentially be put on hold. Once they begin to pay their premiums again, the policy is reinstated and a new contestability period begins.

6) Your claim cannot be denied after the contestability period. After a policy’s contestability period has ended, a life insurance claim is considered incontestable. This means that insurance companies are prohibited by California law from denying your life insurance claim on any basis other than nonpayment of the policy’s premiums.

If your life insurance claim was denied due to a pre-existing condition, speak to one of our helpful claim advisors today to see if we can help.

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California Insurance Code. § 10113.5.

ClaimCounsel. “6 Steps for Appealing a Denied Life Insurance Claim”.

Dinnocenzo, Eric. American Association for Justice. “Life Insurance Denials Based on Material Misrepresentations: The Application Process, the Law, and Public Policy Collide”.

Free Advice Legal. “Life Insurance Bad Faith: Policyholders Wrongly Rejected Over Pre-Existing Conditions.”

Investopedia. “Death Benefit”.

Investopedia. “Medical Underwriting”.

MacDonald, Jay. Bankrate. “Top 10 Health Hazards For Life Insurers”.

Marquand, Barbara. “The life insurance ‘contestability period’: 7 things to know”. October 2014.

Pareto, Cathy. Investopedia. “Intro To Insurance: Types of Life Insurance”.

Roberts-Grey, Gina. Investopedia. “Life Insurance Policies: How Payouts Work”. December 2014.

Wolfe, Mark. Avvo. “Life Insurance Claims: Important Information for Beneficiaries and Claimants”.