How to recognize and fight bad faith life insurance claim denials
When a life insurance company fails to act fairly or lawfully in handling a claim, it may be acting in bad faith. If your claim has been denied for questionable reasons—or if the insurer is stalling, ignoring communication, or digging for excuses not to pay—you may have legal grounds to challenge their actions and pursue the full benefits owed to you.
What does bad faith by a life insurance company look like?
Every life insurance policy is a legal contract, and both sides—the insurer and the policyholder—are expected to uphold their obligations. While policyholders pay premiums on time and truthfully disclose relevant information, insurers are required by law to investigate claims promptly, communicate transparently, and issue payment in good faith when the claim is valid. When they don’t, that’s where bad faith comes into play.
Bad faith occurs when an insurer unreasonably delays, denies, or obstructs a claim without a valid reason, especially if the denial is based on deceptive, unfounded, or manipulative tactics. Policyholders and beneficiaries facing such treatment have the right to investigate further and potentially take legal action.
1. Lack of communication or transparency
One of the earliest signs of bad faith is a communication breakdown. If your insurer ignores your claim, fails to acknowledge receipt of required documents, or avoids answering questions, it may be an intentional tactic to discourage you from pursuing your benefits. The law obligates insurance companies to maintain open lines of communication, respond to inquiries in a timely manner, and provide updates about the status of your claim. Silence, vague responses, or repeated "we’re still reviewing" messages over weeks or months may indicate a breach of that duty.
2. Denying a valid claim without a clear reason
If your life insurance claim was denied and the insurer failed to give a legitimate explanation—or offered a vague or suspicious one—you may be dealing with a wrongful denial. Insurers are required to justify their decisions in writing. A denial without any supporting evidence or one that misinterprets the terms of the policy can signal bad faith. Insurers sometimes count on the beneficiary’s lack of legal knowledge to push through an unjustified denial, hoping the claimant won’t fight back.
3. Unreasonable delay in paying out a valid claim
Delaying payments is another strategy insurers use to frustrate beneficiaries. Even when a claim is approved, they may drag their feet in issuing the check. Some companies do this to pressure the claimant into accepting a smaller settlement out of financial desperation. Meanwhile, the insurer benefits by holding onto the funds longer and earning interest. These delays are not just unethical—they may also violate laws governing timely payment of death benefits. In many states, insurers must pay within a specific timeframe once all required documents have been submitted.
4. Attempts to retroactively cancel or alter the policy
Perhaps one of the most egregious forms of bad faith is when an insurance company tries to rescind or modify a policy after a claim is filed. This tactic, known as post-claim underwriting, is illegal in many situations. For example, the insurer might comb through the original application looking for an unintentional error or omission—even if it has nothing to do with the cause of death. If the insurer tries to retroactively argue that coverage never existed or that the policyholder was ineligible, you may be dealing with an intentional effort to avoid paying a legitimate claim.
5. Focusing on minor inconsistencies to justify denial
Sometimes insurers will fixate on irrelevant or minor discrepancies—such as a misspelled word on the application or an old address—to cast doubt on the validity of the policy. While insurers do have the right to investigate potential fraud, their investigation must be reasonable and based on actual evidence. If they’re reaching for any excuse to avoid payment, it may be time to escalate the matter legally.
Why legal help is critical in bad faith life insurance cases
When you're facing a bad faith denial, it’s rarely a fair fight. Insurance companies have in-house attorneys, trained adjusters, and large legal teams whose job is to protect company profits. That’s why it’s essential to have an experienced life insurance lawyer on your side.
A knowledgeable attorney can review your denial, demand documentation from the insurer, and pinpoint where the company may have violated its duties. If necessary, your lawyer can file a lawsuit not just to recover the life insurance proceeds—but also to seek damages for emotional distress, attorney’s fees, and punitive damages where applicable. Many states allow for these extra damages in bad faith cases to discourage insurers from using such tactics again.
We’re here to help if you suspect bad faith
If you believe your life insurance claim was denied unjustly, or you’re dealing with an insurer that is delaying, stalling, or playing games, you don’t have to deal with it alone. Our legal team has handled countless cases involving bad faith practices. We’ll review your denial, investigate your rights under the policy, and fight aggressively to get the benefits your loved one intended for you to have.
Don’t wait. The sooner you act, the better your chances of holding the insurer accountable and recovering the compensation you deserve. Contact us today to schedule a free consultation.
FAQ: Bad Faith Life Insurance Claim Denials
What qualifies as bad faith by a life insurance company?
Bad faith includes unjustified claim denials, failure to communicate, unreasonable delays, retroactive cancellations, or efforts to mislead beneficiaries. If an insurer fails to act honestly or fairly, it may be acting in bad faith.
Can I sue my life insurance company for bad faith?
Yes. If an insurer wrongfully denies a claim or violates its duties under the policy, you may sue for breach of contract and bad faith. Successful lawsuits can lead to compensation beyond the policy amount, including punitive damages.
Is it bad faith if the insurer delays paying a valid claim?
Possibly. If the insurer has no valid reason for the delay and is stalling to pressure you into accepting less, it could be considered bad faith. State laws often require timely payouts.
Can an insurer change the terms of a policy after someone dies?
No. Once a valid policy is in place, the insurer cannot retroactively alter or cancel it without violating the law. Attempts to do so can be clear evidence of bad faith.
What should I do if I suspect bad faith?
Document every interaction with the insurer and contact a life insurance attorney immediately. An attorney can assess whether bad faith occurred and guide you in pursuing a claim or lawsuit.