Can a life insurance company deny a claim on a valid policy if the insured dies?

Yes. Apart from fraud in the inception of the policy, or fraud by substitution, the most common ground life insurers use to deny claims is that there was a “material misrepresentation” in connection with the insurance.

The material misrepresentation may occur in the original application for the insurance or in an amendment to the application or in an application for reinstatement for Individual or Group Life cases, or in an application for late enrollment in a Group case.

A material misrepresentation sufficient to deny a claim can not be just any misstatement. (For example, if you said you had green eyes but the company would say they are hazel, that would NOT be material.) Under many states’ laws, a material misstatement is one that if fully and truthfully disclosed would have led to a refusal by the insurer to issue the policy, at least on the terms and conditions it issued the policy.

While a material misrepresentation can be made about almost anything the application seeks to uncover, such as the applicant’s occupation, employment history, age, income, other insurance in force, prior applications for insurance, insurance claims made, cigarette smoking or tobacco usage (and other slow suicide attempts), driving record or tickets, drinking, hobbies, piloting or flying in non-commercial aircraft, etc, the most commonly charged misrepresentations involve an applicant’s state of health and medical history.

Case Studies: Examining Life Insurance Claim Denials

Case Study 1: Denial of Health Insurance Claim

John Smith had a health insurance policy that covered various medical expenses. He underwent a surgical procedure for a chronic condition, assuming it would be covered by his insurance.

However, when he submitted the claim, the insurance company denied it, stating that the procedure was not medically necessary. John was left with a substantial medical bill and sought legal assistance to challenge the denial.

Case Study 2: Auto Insurance Coverage Dispute

Samantha Brown was involved in a car accident where the other driver was at fault. Samantha’s vehicle sustained significant damage, and she filed a claim with her auto insurance company to cover the repair costs.

However, the insurance company disputed the extent of the damages and offered a settlement that was far below the actual repair expenses. Samantha engaged in negotiations and eventually sought legal representation to ensure she received fair compensation.

Case Study 3: Homeowners Insurance and Natural Disasters

After a severe storm, Mark Davis discovered that his home had suffered extensive damage due to flooding. He promptly filed a claim with his homeowners insurance, expecting coverage for the repairs.

However, the insurance company denied the claim, stating that flooding was not covered under Mark’s policy. Mark sought legal advice to understand his options and determine whether the denial was valid under his policy’s terms and conditions.

Case Study 4: Life Insurance Contestability Period

Sarah Johnson had a life insurance policy that she purchased two years ago. Unfortunately, Sarah passed away unexpectedly, and her beneficiaries filed a claim to receive the death benefit.

However, the insurance company initiated an investigation during the contestability period, raising concerns about misrepresentation in Sarah’s application. The beneficiaries sought legal guidance to contest the potential denial based on the insurance company’s allegations.