Life insurance is supposed to offer surviving loved ones some support during a difficult time. Instead of receiving what they are owed, however, some beneficiaries get a rejection notice. What causes an insurer to deny a life insurance claim? Here are four of the most frequent reasons.

Misrepresentation or inaccurate information

Misrepresentation is the most common reason for contested claims. This is when the insurer believes the policy holder did not provide accurate information when purchasing the plan. Including false information on an application – even if unintentional – can threaten the validity of a life insurance plan.

The contestability period

As AAA explains, most insurance policies have a two-year contestability period. This means, during the first two years after a plan is purchased, an insurance company has wide latitude to withhold or limit a claim based on misrepresentation. An insurer can be quite particular, dinging the policy holder for things such as:

  • Inaccurate income reporting
  • Not disclosing they have another life insurance policy
  • Misrepresenting their health history
  • Not disclosing certain behaviors, such as smoking

Missed payments

As the years go by, it’s easy to forget about certain monthly payments. Or maybe you switched bank accounts at some point and neglected to update your automatic payment information. Whatever the case, missed premium payments generally lead to a lapsed policy – and losing out on coverage you believe is there.

Policy exclusions

No insurance plan is complete without a list of exclusions. While there are some exclusions that are fairly common across most plans, others may come with criteria specific to that policy. It’s important to read over and understand these exclusions to ensure the coverage is what you believe it to be.

Beneficiaries can appeal a rejected claim

A rejection letter is not the end of the road. Most life insurance policies are governed by a federal law known as ERISA. These guidelines mean beneficiaries can appeal an insurance company’s decision. By doing so, you can help ensure the insurer is holding up its end of the deal.