4 Common Mistakes That Can Lead to Life Insurance Claim Denials
If you're taking out a life insurance policy to provide financial security for your loved ones, it's crucial to avoid common pitfalls that could cause your beneficiaries' claims to be denied. As attorneys who handle wrongful life insurance claim denials every day, we've seen firsthand how innocent missteps made during the policyholder’s lifetime can have devastating consequences for their surviving family members.
Sometimes, claim denials are completely baseless—just another tactic by the insurer to delay or avoid paying out. Other times, however, insurers rely on specific clauses buried in the fine print of your policy to justify their decision. This article is a cautionary guide for policyholders who want to make sure their families actually receive the death benefit they were promised.
Below are four of the most common ways policyholders unintentionally sabotage their life insurance benefits.
1. Lying on Your Life Insurance Application
A life insurance policy is a contract. That means contract law applies, and under those rules, both parties must be truthful during the negotiation process. When you fill out a life insurance application, the insurer relies on your representations—especially about your health, habits, and lifestyle—to assess your risk and determine your premiums.
If you make a “material misrepresentation”—a false statement that would have changed the insurer’s decision to issue a policy—they can rescind coverage, even after your death. This is especially true if the misrepresentation is discovered during the contestability period, typically the first two years of the policy.
Example: If you say you’ve never smoked but have a 15-year history of smoking, and you die within two years of policy issuance, the insurer will likely investigate your medical and pharmacy records. If they discover your deception, they can deny the claim outright—even if your death wasn’t smoking-related.
Honesty is essential. Saving a few dollars on premiums isn’t worth leaving your loved ones with nothing.
2. Skipping Premium Payments
Missing payments might seem like a small issue, but it can destroy your coverage entirely. Most states require insurers to offer a grace period of at least 30 days for late payments. If you die within that window, your policy should still be honored.
However, after the grace period expires, the insurance company can cancel the policy. And here’s the painful truth: even if you paid faithfully for decades, just one missed payment before your death could invalidate the entire policy.
Trying to reinstate the policy later also has its downsides. Many insurers require a new application or medical exam if you lapse and then attempt to resume coverage. You could face higher premiums—or worse, be denied entirely.
Moral of the story: Don’t treat premium payments like an optional expense. Missing even one can jeopardize everything you planned for.
3. Dying With Drugs in Your System
Most life insurance policies include exclusions for deaths involving illegal or non-prescribed substances. These exclusions are among the most strictly enforced by insurance companies, and they don’t only apply to overdoses or “street drugs.”
For example, if you pass away in a car accident but the autopsy reveals you had a prescription drug in your system—one not prescribed to you—the insurer may argue your death was disqualified under their drug exclusion clause.
This issue has become particularly widespread in the wake of the opioid epidemic. Even trace amounts of a controlled substance can be used to trigger a claim denial.
Key takeaway: Always understand what substances your policy excludes, and ensure any medications are properly prescribed to you.
4. Dying While Engaged in Risky Activities
Most life insurance contracts have a clause known as an “inherently dangerous activity” exclusion. These clauses state that if you die while doing something deemed unreasonably dangerous, the insurer may deny the claim.
Activities commonly included (explicitly or implicitly) in this exclusion include: SCUBA diving, Skydiving, Motorcycle racing, Mountain climbing, Traveling in certain high-risk regions or countries, Driving at excessive speeds
What’s troubling is how broadly these exclusions can be interpreted. We’ve seen insurers deny claims simply because the policyholder was vacationing abroad, or because they were driving 10 mph over the speed limit. If the policy is vague or doesn’t specifically define “dangerous,” insurers have room to argue nearly anything was too risky to warrant payment.
Don’t Let Your Policy Fail Your Family
The purpose of buying life insurance is to provide peace of mind—not just for you, but for those you leave behind. But too often, small decisions made during life can result in a devastating claim denial when it matters most.
To avoid jeopardizing your loved one’s financial future: Be truthful in your application, Keep up with your premium payments, Know what exclusions apply to your policy, Communicate clearly with your beneficiaries about the policy's existence
Even with these precautions, insurance companies can and do exploit loopholes and ambiguous policy language to wrongfully deny valid claims. That’s where we come in.
If You’ve Received a Claim Denial, Call Us Today
Our law firm specializes in overturning life insurance claim denials. Whether you’re dealing with a policy lapse, contestability review, or suspicious exclusion, we know the tactics insurers use—and we know how to fight back.
Call us today for a free consultation. We don’t get paid unless you win. Let us help you secure the benefit your loved one intended for you. We’re here to help.