Many people are shocked to learn that life insurance is governed by contract law. Like any other written agreement, a life insurance policy is a contract between two parties: the insurer and the policyholder. That means both sides are expected to act honestly and in good faith, especially during the application process. But all too often, life insurance companies twist this principle—known as material misrepresentation—to wrongfully deny valid claims. If you received a denial letter alleging a material misrepresentation, it’s critical to understand what that means and whether the insurer’s claim holds any legal weight.
Under contract law, a “material misrepresentation” occurs when one party lies about something so significant that the other party would have never entered the contract had they known the truth. In life insurance, this usually means that the applicant supposedly gave false or misleading information on their application—often about medical history, lifestyle habits, or dangerous activities. If the insurer can prove that the misstatement was material, they can cancel the policy and refuse to pay the death benefit. But not all omissions or inaccuracies qualify as material misrepresentations—and that’s where insurance companies frequently overstep.
Understanding the Application Process and What Counts as 'Material'
The life insurance application process is considered a negotiation under contract law. The policyholder provides information—typically through a health questionnaire or phone interview—and the insurer uses that information to decide whether to issue a policy and on what terms. If the policyholder omits something significant, like a history of cancer or smoking, that could be considered material. But insurers sometimes stretch this concept beyond its intended purpose. They claim that minor or irrelevant details—like enjoying certain hobbies—are material, simply to avoid paying a claim.
Our law firm regularly handles cases where insurers invoke material misrepresentation unfairly. A classic example comes from one of our clients, Nicole, whose husband Steve passed away just 16 months after obtaining a new life insurance policy through his employer.
Steve's Story: A Denial Based on Camping?
Steve was in his early 60s when he was promoted at work and became eligible for group life insurance coverage. As part of the enrollment process, he completed a health and lifestyle questionnaire. One question asked if he regularly engaged in “dangerous hobbies,” listing examples like motorcycle riding, scuba diving, or skydiving. Steve checked “No,” which was truthful—he didn’t participate in those or any other extreme activities.
Tragically, Steve passed away suddenly while camping, an activity he loved and did often. His wife Nicole, listed as the sole beneficiary on his policy, filed a claim with the life insurance company. After weeks of silence, she received a letter denying her claim. The reason? The insurer alleged that Steve failed to disclose camping as a dangerous hobby and that this constituted a material misrepresentation. The company further claimed it never would have issued the policy had it known Steve enjoyed camping.
Nicole was stunned. Camping? Dangerous? This made no sense. No doctor, coroner, or investigator had cited anything unusual or risky about Steve’s death. Fortunately, a friend referred her to our law firm. Within minutes of reviewing the denial letter and Steve’s application, we knew this was a textbook case of an insurer trying to stretch the law for its own benefit.
Building the Case Against the Insurer’s Manufactured Claim
We immediately filed suit, asserting that the insurance company’s denial was not only baseless but in bad faith. During discovery, we demanded that the insurer produce:
Any internal documents or policies that defined camping as a dangerous activity
A list of prior claim denials involving camping
Underwriting guidelines showing that camping was considered a material risk
They couldn’t produce a single piece of evidence to support their position. The insurer had never previously treated camping as a dangerous activity or denied a policy based on it. In mediation, we pointed out that their decision was arbitrary and inconsistent—and clearly made after the fact, simply to avoid payment.
Faced with their inability to justify the denial, the insurance company agreed to settle. Nicole received the full value of Steve’s life insurance policy—just as he had intended when he named her as his beneficiary.
Why This Happens So Often—and What You Can Do About It
Sadly, Steve and Nicole’s story isn’t unique. Life insurance companies frequently rely on questionable interpretations of policy language to deny legitimate claims. They hope that grieving beneficiaries will be too overwhelmed or intimidated to fight back. And when they invoke complex contract terms like “material misrepresentation,” many people assume the denial must be valid.
But here’s the truth: a misrepresentation must be both intentional and material to justify a denial. Not every omission on an application qualifies. If the insurer never asked about a detail—or if the detail is irrelevant to their underwriting standards—they cannot claim it was material after the fact.
The insurance company also carries the burden of proof. They must show:
The applicant knowingly misrepresented a fact
The fact was crucial to the insurer’s decision to issue the policy
The insurer would have denied coverage had they known the truth
If any part of that chain breaks down, the denial won’t hold up in court.
Get Legal Help If You’re Facing a Material Misrepresentation Denial
If your life insurance claim has been denied on the grounds of material misrepresentation, don’t take the insurer’s word for it. These cases are highly fact-specific and often rest on legal nuances that only an experienced life insurance attorney can properly assess. Our firm has successfully reversed hundreds of denials by exposing false claims of materiality and holding insurers accountable for bad faith conduct.
We offer free consultations and take most cases on a contingency fee basis, which means you pay nothing unless we recover money for you. If you're facing a denial that doesn’t sit right—whether due to alleged misstatements, excluded activities, or anything else—we’re here to help you fight for the benefit your loved one intended for you to receive.