It’s very rare for a life insurance company to deny a policy claim — at the end of 2021, only 0.02% of life insurance payouts were reportedly delayed or denied. [1] However, it’s not impossible. An insurer might deny the death benefit if the policyholder missed payments for their coverage or if the cause of death was excluded from their policy, among other reasons.
If your claim is rejected, the life insurance policy becomes void and the insurer can refund the premiums paid by the policyholder. You can appeal the denial by contacting the insurance company.
Why do life insurance claims get denied?
Life insurance companies deny claims if the insured:
Died by suicide: Insurers won’t pay out for death caused by self-harm while the suicide clause is in effect (usually the first two years of a policy, also called the contestability period).
Died doing an excluded activity: Policies won’t cover certain causes of death, such as death while committing a crime or any other activity explicitly excluded in their policy. For example, some policies have an aviation exclusion, meaning the death benefit won’t get paid if the person insured dies while piloting a plane.
Lied on their application: The benefit could be reduced or completely denied if any information was intentionally misrepresented on the application.
Stopped paying their premiums: if you miss one premium payment, most insurance companies have a 30-day grace period. But if you miss multiple payments, your policy will be canceled.
“If someone’s claim is denied, there’s going to be a very clear reason why,” says Jake Herskovits, a life insurance sales specialist at Policygenius. “Maybe they’re not the beneficiary that’s listed, or the [insured] person died by suicide in the first two years [of the policy].”
Beyond that, Herskovits says, it’s unlikely you’ll ever have a claim denied.
If your claim is denied for any of the reasons above, you won’t have much success appealing the insurer’s decision. Life insurance policies include language that voids your coverage for non-payment or for dishonesty during the application process.
→ Learn more about when life insurance companies won’t pay out
How to appeal a life insurance claim rejection/denial
When an insurance company denies a life insurance claim, the beneficiary of the policy will get a written notice with an explanation of the decision. If you think your claim was wrongly denied, start with a call to the insurance company.
Contact the insurer
The insurance company can answer questions about your claim, tell you what paperwork you need, and explain their appeals process. You’ll usually need to present proof to support your appeal, which may include:
Autopsy report
Medical documents
Proof of premium payments
Appeal the rejection
If you feel you have a solid case and want to appeal your denied life insurance claim, you can:
Contest the decision with the insurer directly. This option is the most affordable, but can be stressful to navigate.
Get free help from your state department of insurance or attorney general. This method will give your appeal more weight, but can take longer.
Hire a lawyer to make your appeal or prepare a lawsuit. This will be more costly, but more efficient.
How to protect your beneficiaries from a claim denial
If you or a loved one has an active life insurance policy, there are a few things you can do to ensure the claims process will go smoothly if you pass away.
Automate your payments: Set your premiums to be paid automatically so you never have to worry about missing a bill and losing your coverage.
Be honest on your application: Don’t conceal any information, including health conditions or risky hobbies, when you’re buying your policy.
Keep your policy up-to-date: Update your beneficiaries after major life events and make sure that their contact information is correct.
Share your plans: Your beneficiaries should know that you have life insurance, where to find the policy and other paperwork they’ll need, and how to file a claim.
Most people don’t have to worry about their insurance company denying their beneficiary the payout money.
If your claim is denied, make sure you can prove that there was an error on the insurer’s part before trying to appeal. Otherwise, contesting a rejection won’t be worth the time or effort.
