Can You Sue a Life Insurance Company for Denying Your Claim? Absolutely—And Often, You Should.
Life insurance companies may present themselves as caring institutions committed to your financial security—but when the time comes to collect on a death benefit, those same companies often go silent, slow down the process, or issue outright denials. If you’ve received a life insurance claim denial or experienced unreasonable delays, don’t assume the insurer’s word is final. In many cases, beneficiaries have the right to sue the life insurance company for breach of contract or bad faith—especially when the denial was based on flimsy or manufactured justifications.
Why do life insurance companies deny valid claims?
It’s a question we hear all the time. Families are blindsided by a denial letter, often months after the death of a loved one, with vague references to exclusions, “material misstatements,” or lapses in policy coverage. Unfortunately, many of these denials are not rooted in fact or law—they’re profit-driven decisions.
Here are some of the most common (and commonly disputed) reasons life insurers give when denying a claim:
The policy lapsed due to nonpayment
The application contained errors or omissions
The death occurred under allegedly excluded circumstances
The claim paperwork was incomplete or filed too late
The insurer suspects fraud without clear evidence
Sometimes, insurers even deny claims that fall outside the contestability period, which is typically two years after the policy goes into effect. In such cases, a denial due to application misstatements may be invalid. Yet, many beneficiaries accept the denial without question, assuming the company must be right. That’s a costly mistake.
What is bad faith, and how does it apply to life insurance?
When an insurance company issues a policy, it takes on a legal duty to act in good faith and deal fairly with the policyholder and their beneficiaries. This includes obligations to investigate claims reasonably, respond in a timely manner, and refrain from using dishonest or obstructive tactics.
Bad faith conduct by a life insurance company may include:
Denying a claim without a reasonable basis or valid explanation
Unjustified delays in investigating or processing the claim
Misstating policy provisions or falsely interpreting exclusions
Canceling a policy retroactively to avoid a payout
Failing to communicate with beneficiaries in a timely or transparent manner
If any of these practices occur, the insurer may be liable for more than just the death benefit. Courts may award additional damages—including interest, attorney fees, and in some cases, punitive damages—to punish egregious bad faith conduct.
When is the right time to sue a life insurance company?
You may be able to sue the insurer if:
You’ve received a formal denial without valid reasoning
The insurer has delayed payment far beyond what your state allows
The company failed to respond to your communications or requests
Your loved one’s policy was canceled improperly or without notice
You’ve exhausted all appeals and administrative remedies, especially under ERISA-governed policies
If the claim falls under ERISA (such as employer-provided group life insurance), your options are slightly different. Before suing, you must complete the insurer’s internal appeals process. But once that process is complete—or if deadlines are missed—lawsuits can be filed in federal court, and a knowledgeable ERISA attorney is essential.
Legal causes of action for denied life insurance claims
Depending on your state and the policy type, you may be able to pursue claims such as:
Breach of contract – The insurer failed to honor the terms of the policy
Bad faith – The company violated its duty of fair dealing and acted to harm the insured or beneficiary
Unfair trade practices – In some states, insurers may be liable under consumer protection laws for deceptive or abusive practices
The availability of these legal avenues depends on your jurisdiction, the circumstances of the denial, and the policy’s specific terms. That's why speaking with an attorney early in the process is so important.
What to do before suing a life insurance company
Before you consider litigation, take proactive steps to strengthen your case and preserve your legal rights:
Gather all documents – Collect the original policy, death certificate, application forms, beneficiary designations, and any correspondence with the insurer.
Be cautious with insurer communications – Claims representatives often record calls and may use your words against you. Keep notes of what is said and stick to facts.
Track all timelines – Note the dates of every communication, submission, or request. Delays or lack of response may strengthen your case.
Consult a life insurance attorney – Ideally before filing your initial claim, but certainly as soon as you suspect the insurer is acting in bad faith or plans to deny your claim.
If you're already facing a denial, legal representation is critical. Insurance companies have their own legal teams. You should, too.
How an experienced attorney can help
At our firm, we work exclusively on wrongful life insurance claim denials. We have helped clients win payouts after delays, reversals, and outright rejections. In many cases, just getting a lawyer involved is enough to get the insurer to reverse course. In others, litigation is the only option.
We know how to fight:
Insurers using vague policy language to justify denials
Improper lapses due to missed premium notices
Denials issued long after valid contestability periods
Cases where beneficiaries were misinformed or misled by the employer or plan administrator
Policies canceled without notice or proper review
If your claim has been denied or is being ignored, don’t wait. Your right to sue may be limited by statutes of limitation, policy terms, or ERISA deadlines.
FAQ: Suing a Life Insurance Company for Denied Benefits
Can I sue a life insurance company for bad faith?
Yes. If the insurer unreasonably denied your claim, delayed payment, misrepresented the policy, or failed to investigate fairly, you may have grounds for a bad faith lawsuit.
How long do I have to sue after a denial?
It depends on your state. Some allow as little as one year, while others offer several. If your policy is governed by ERISA, you must appeal within a specific window—usually 60–180 days—and sue shortly thereafter if the appeal is denied.
Do I need a lawyer to sue the insurance company?
Yes. Life insurance litigation is complex, and insurers will have their own legal team. A lawyer experienced in life insurance law—especially ERISA law for employer policies—is essential for success.
Can I sue if the policy was canceled before the insured died?
Maybe. If the cancellation was improper—for example, if the insurer failed to notify the insured or accepted premiums after the supposed lapse—you may be able to challenge the cancellation.
Will I owe legal fees if I lose?
Our firm works on a contingency fee basis—you don’t pay unless we win your case. We cover all upfront legal costs so you can focus on getting justice.