One of the most common reasons life insurance companies deny claims is alleged misrepresentation on the application. These denials typically occur when the insurer asserts that the policyholder provided false or incomplete information, particularly concerning health history, lifestyle, or other material facts. While some misstatements may be intentional, many arise from innocent mistakes, vague questions, or misunderstandings. Regardless of intent, insurers often treat any inaccuracy as a basis to void the policy.
What Constitutes a Misrepresentation
A misrepresentation occurs when an applicant provides incorrect or incomplete information that the insurer relies on when issuing the policy. Common areas where misrepresentations are alleged include:
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Omission of prior medical diagnoses or hospitalizations
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Failure to disclose prescription medications or treatment
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Inaccurate statements about smoking, alcohol, or drug use
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Misstated income or occupation
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Inconsistent answers about family medical history
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Errors in listing height, weight, or age
Insurers may compare the original application against medical records, pharmacy reports, and other data sources to identify discrepancies after a claim is filed.
The Role of the Contestability Period
Most policies include a two-year contestability period, during which the insurer has the right to review the application if the insured dies. If a material misrepresentation is found, the company may seek to rescind the policy and deny the claim. This provision is used even when the misstatement had no connection to the cause of death.
For example, if an applicant failed to disclose a prior back injury but later dies in a car accident, the insurer may still deny the claim by arguing that the policy would not have been issued had the prior condition been disclosed. Courts differ on whether such denials are enforceable, depending on the policy language and applicable state law.
Materiality and Intent
To deny a claim based on misrepresentation, the insurer typically must prove that the information withheld or misstated was material. In most jurisdictions, this means showing that the insurer would have refused coverage or issued it on different terms if the truth had been known.
Some states also require the insurer to prove intent to deceive, while others apply a strict standard that focuses only on the impact of the misstatement, regardless of intent. This distinction can significantly affect the outcome of contested claims.
Post-Claim Underwriting
In many misrepresentation cases, insurers conduct what is known as post-claim underwriting. This process involves scrutinizing the original application only after the insured has died, using hindsight and external databases to find inconsistencies. Critics argue that this practice allows insurers to accept premiums for years while planning to investigate only when a claim arises.
While post-claim underwriting is legal in most states, it is subject to limitations. Courts may examine whether the insurer acted reasonably and whether the questions on the application were clear and specific enough to justify denial based on the answers provided.
Disputes and Legal Remedies
Beneficiaries may contest a denial by arguing that the alleged misrepresentation was not material, that the insurer waived its right to contest, or that the policy language was ambiguous. Legal challenges often involve expert testimony, medical records, and interpretation of both state insurance law and the contract itself.
Some courts take the view that ambiguous application questions should be interpreted in favor of the insured. Others have held that failure to disclose even minor or unrelated conditions may justify rescission of the policy.
Conclusion
Life insurance claims denied for misrepresentation involve complex questions of fact, contract interpretation, and statutory law. Insurers often rely on technical errors to justify denial, even when there is no evidence of fraud or intent to deceive. Understanding the standards for materiality, the scope of the contestability period, and the insurer’s obligations under the law is essential when evaluating the validity of a denial based on misrepresentation. To learn more about denied life insurance claims due to misrepresentation visit The Lassen Law Firm website.
