Overcoming a Life Insurance Denial for Material Misrepresentation: Strategies and Steps

Receiving a denial of a life insurance claim can be a significant emotional and financial blow, especially during a period of grief. One common reason insurers deny claims is due to what they determine to be “material misrepresentation” on the initial application. This means that the insurer believes the policyholder provided false or incomplete information that affected their decision to issue the policy or set the premium rates. However, a denial is not always the final word. There are steps you can take and strategies to employ if you believe the life insurance denial was unjust. Here’s how to challenge and potentially overturn a denial for material misrepresentation.

Understand the Basis of the Denial

The first step is to thoroughly understand why the claim was denied. Request a written explanation from the insurer if you haven’t already received one. This should detail the alleged misrepresentation and why it was considered material to the risk assumed by the insurer. Common areas of dispute include undisclosed medical conditions, income, smoking status, or risky hobbies.

Review the Policy and Application

Carefully review the life insurance policy and the original application. Look for any discrepancies between what was reported and the insurer’s claims. It’s crucial to understand whether the alleged misrepresentation was indeed false and if it was significant enough to impact the underwriting process.

Gather Evidence

Compile evidence that counters the insurer’s reasons for denial. This might include medical records, employment history, or statements from physicians. If the misrepresentation was an honest mistake, gather any documents or communications that support this. If the question on the application was ambiguous, prepare an argument that your interpretation was reasonable.

Legal and Regulatory Review

Familiarize yourself with the life insurance laws in your state. Some states have specific laws regarding material misrepresentation and the time frame in which an insurer must contest the accuracy of application information (often called the “contestability period,” typically two years). If the policy has passed this period, the insurer may not be allowed to deny a claim based on misrepresentation unless it involves fraud.

Write a Formal Appeal

Compose a formal appeal letter to the insurance company. Outline your arguments clearly, referencing specific points in the policy and application and attaching all supporting documentation. The appeal should be concise, factual, and respectful. Clearly state why the denial should be overturned and request a reevaluation of the claim.

Seek Professional Help

If the stakes are high or the case is complex, consider hiring a lawyer who has significant experience in insurance law. An experienced attorney can navigate the legal intricacies, negotiate with the insurance company, and, if necessary, represent your interests in court. Additionally, a lawyer can ensure that all procedural rules are followed, which is often critical in preserving your rights in the dispute.

Consider External Review

If your appeal is denied, you might have the option to take your case to an external review. Many states offer a free review process through the state insurance department. Alternatively, you may pursue litigation if you believe the denial was wrongful and you have strong evidence to support your claim.

Prevention Tips

While the focus here is on contesting a denial, prevention is the best strategy. When applying for life insurance:

1. Answer all questions truthfully and completely.
2. Review your application carefully before submitting.
3. Consult with a medical professional if you’re unsure about how to disclose health issues.
4. Keep copies of all documents submitted to the insurer.

Conclusion: Persistence and Precision

Challenging a life insurance denial due to material misrepresentation often requires persistence, attention to detail, and a solid understanding of your rights and the facts of your case. By carefully constructing your appeal and, if necessary, enlisting professional help, you can sometimes increase the chances of overturning the denial and securing the benefits to which you are entitled. Remember, each case is unique, so tailor your approach to the specifics of your situation. Call us at (800) 337-7755 or visit VictimAid.com to schedule your free case review today.