Yes—life insurance claims can be denied if the transfer of ownership was not completed properly. Whether the policy was sold, gifted, or moved into a trust, any administrative or legal missteps in the transfer process can give the insurer an easy excuse to deny future claims. This is especially problematic when years have passed and no living party remains who can correct the record or prove what actually occurred.
If you’re a beneficiary or presumed policy owner facing a denial over ownership issues, it’s critical to understand how these errors happen and what can be done to fight back.
Why Would Someone Transfer a Life Insurance Policy?
There are a number of legitimate reasons why someone might transfer ownership of a life insurance policy, including:
The policyholder is experiencing financial hardship and can no longer pay the premiums
A policy is sold to a third party or gifted to a friend or family member
A policyholder wants to transfer ownership to a trust for estate planning purposes
Ownership is passed to a business partner as part of a buy-sell agreement
No matter the reason, the transfer must be handled with precision. A simple oversight—such as failing to complete a change-of-ownership form or notify the insurer—can cause confusion years later when beneficiaries file a claim.
What Happens When Ownership Transfers Are Done Incorrectly?
Improperly executed ownership transfers can create major complications when the insured passes away. One of the most common scenarios involves:
The original policyholder dies but is still listed as the legal owner
A new "presumed" owner continues paying premiums without verifying legal ownership
Years later, when that second person dies, beneficiaries submit a claim—only to be told the policy ownership was never properly transferred
At that point, no one is alive to provide clarification, and the insurer may deny the claim entirely, citing unresolved or incomplete documentation. These cases are especially difficult when the original intent of the transfer is unclear or if multiple parties assert ownership or beneficiary status.
Common Denial Reasons in Faulty Policy Transfer Cases
Life insurance companies have a handful of go-to arguments when denying claims based on transfer issues. These include:
Improper documentation: The transfer was never completed according to the insurer’s requirements
Unpermitted transfer: The policy terms prohibited certain types of transfers, such as selling the policy to a third party
Conflicting ownership: The legal owner on record doesn’t match the individual who was paying premiums or named as beneficiary
Fraudulent transfer: The insurer believes the transfer was done to manipulate policy rules or conceal information
Each of these gives the insurer justification to delay or deny payment. If a beneficiary can’t prove that the transfer was valid and permitted under the contract, the provider will often refuse to pay—no matter how long the policy was active or how much was paid in premiums.
What Makes These Cases So Difficult to Resolve?
What makes faulty transfer disputes especially complex is that they often surface years or even decades after the original policy was created. By the time a dispute arises, the people who handled the transfer—or had knowledge of the insured’s intent—may no longer be alive. This leaves beneficiaries in a difficult position, forced to reconstruct the past with incomplete documents and vague memories. In many cases, even when beneficiaries can prove ongoing premium payments, insurers will argue that the legal owner of the policy was never changed and therefore no valid payout obligation exists.
Why You Need a Lawyer for Transfer Dispute Denials
Attempting to resolve these types of disputes on your own is almost always futile. Insurers are well-versed in contract language and will not deviate from their internal guidelines without legal pressure. A skilled life insurance attorney can help by:
Reviewing all relevant policy documents and correspondence
Identifying procedural errors made during the transfer process
Locating witnesses or surviving parties who can attest to the policyholder’s intent
Filing a formal appeal or lawsuit to compel payment based on equity, policy language, or state insurance law
The sooner you involve legal counsel, the better your chances of preserving evidence and building a compelling claim. We've helped clients recover substantial payouts in cases where ownership disputes led to denial—and we can help you too.
Don’t Let a Faulty Transfer Cost Your Family the Benefit They Deserve
If a life insurance claim has been denied due to ownership issues, incomplete transfers, or accusations of fraud, don’t give up. Insurance companies use these technicalities to hold onto money that rightfully belongs to grieving families. Our law firm focuses exclusively on wrongful life insurance claim denials and has the experience needed to handle even the most complex transfer disputes.
Let us review your case at no cost. If we take on your case, you won’t pay us a dime unless we recover money for you.