Receiving a life insurance claim denial can be frustrating and confusing, particularly when you were counting on the policy proceeds after the death of a family member. We often see life insurance companies delay the claims process and err in favor of the company when denying claims. Doing so not only violates the law, but fails to honor the wishes and financial commitment of the loved one covered by the policy.
A denial letter, however, is not necessarily the end of a life insurance claim. Mark Santi has recovered millions of dollars in previously-denied claims.
Life insurance claim denials can involve questions about the proper lapse date, the insurance application, the insured's medical history, payment of premiums, the policy's contestability period, exclusions in the policy, or even a dispute over who is entitled to receive the death benefit.
If your life insurance claim has been denied in Minnesota, one of the first things you should do is determine exactly why the insurance company says it does not have to pay the claim.
That answer will often determine what needs to happen next.
1. Read the Life Insurance Denial Letter Carefully
Start with the insurance company's denial letter.
Look for the specific reason the insurer gives for denying the claim and any policy provisions it relies upon.
For example, an insurer might contend that:
the insured made a material misrepresentation on the life insurance application;
the policy was no longer in force because premiums were not paid;
an exclusion applies to the insured's death;
the death occurred during the policy's contestability period;
the policy was never properly issued or became ineffective;
the person making the claim is not the proper beneficiary; or
the coverage available through an employer was different from what the beneficiary expected.
Do not assume that the insurer's characterization of the facts or interpretation of the policy is necessarily correct.
You should request a written explanation of the denial and the specific policy language upon which the insurance company relies.
2. Get a Complete Copy of the Life Insurance Policy
The denial letter is only one piece of the puzzle.
You should also obtain the policy itself, including relevant applications, riders, amendments, endorsements, and beneficiary designations. Often life insurance companies will refuse to provide this information to you.
Then compare the insurer's stated reason for denial with the actual policy language.
This can be particularly important when the insurance company relies on an exclusion or claims the policy had terminated before the insured's death. Often language in the policy is highly technical and, in some instances, we have Minnesota case law clarifying what the language means.
With employer-provided life insurance, additional documents may be important because the coverage may be governed by an employee benefit plan and federal law.
3. Determine Whether the Insurer Is Contesting the Application
Some life insurance claims are denied because the insured died within two years of taking out the policy (the contestability period) and the insurer contends that the insured provided inaccurate or incomplete information when applying for coverage.
These disputes may involve questions about:
medical conditions;
prior diagnoses;
prescription medications;
tobacco or nicotine use;
alcohol or drug use;
previous medical treatment; or
other information requested on the application.
The fact that an answer on an application was inaccurate does not, by itself, tell you whether the insurance company is legally entitled to deny the death benefit.
The wording of the application, the policy, the nature of the alleged misrepresentation, when the policy was issued, and the applicable law can all matter.
4. Check How Long the Policy Was in Force
The date the life insurance policy became effective can be extremely important.
Minnesota law generally requires certain life insurance policies to contain an incontestability provision under which the policy becomes incontestable after it has been in force during the insured's lifetime for two years, subject to specified exceptions.
This is commonly referred to as the contestability period.
If an insured dies relatively soon after purchasing a policy, the insurer may conduct a more extensive investigation into the original application. That investigation may include obtaining medical records and comparing those records with the answers given during the application process.
A beneficiary should not assume that a claim arising within the first two years will be denied. Nor should a beneficiary assume that every possible dispute disappears merely because more than two years have passed.
The specific policy and the reason asserted by the insurer need to be examined.
5. If the Insurer Claims the Policy Lapsed, Examine the Payment History
Another common dispute involves an insurer claiming that the life insurance policy was no longer in force when the insured died.
For example, the insurer may contend that a premium was missed and the policy lapsed before the date of death.
In a lapse case, important evidence may include:
premium statements;
bank or credit-card records;
automatic-payment records;
correspondence from the insurer;
lapse or termination notices;
grace-period notices;
reinstatement documents; and
communications with the insurance agent or company.
Do not throw away envelopes, letters, emails, or other communications relating to the policy. They may help establish what happened before the insured's death.
6. Pay Attention to Any Suicide Exclusion
A suicide exclusion presents a different issue.
Under current Minnesota law, a life insurance policy or certificate issued or delivered in Minnesota may exclude or restrict a death benefit when the insured dies as a result of suicide within one year from the date the policy or certificate was issued. This time period was recently reduced from two years.
The exclusion or restriction must be clearly stated in the policy or certificate. Minnesota law also provides that when a death benefit is denied under such a provision, the policy must provide for the refund of premiums paid for the coverage providing the denied death benefit.
The dates matter. The language of the particular policy matters as well.
7. Find Out What the Insurance Company Reviewed
If the insurer conducted a claim investigation before denying the claim, determine what information it relied upon.
Depending on the reason for the denial, the insurer may have reviewed:
the original insurance application;
medical records;
prescription records;
the death certificate;
an autopsy or toxicology report;
premium-payment records;
communications with the insured;
information from the insurance agent; or
beneficiary documents.
This is particularly important in a misrepresentation case.
For example, if the insurer says the insured failed to disclose a medical condition, you will want to understand the precise application question, the answer given, the medical evidence the insurer believes contradicts that answer, and why the insurer contends the information justified denying the policy benefits.
8. Preserve the Documents Related to the Claim
Keep a complete file.
That file should include the policy, application, denial letter, claim forms, death certificate, correspondence with the insurance company, premium records, beneficiary forms, and other relevant documents.
Also preserve electronic communications.
If you speak with the insurer by telephone, consider keeping a record of the date of the conversation, the name of the person you spoke with, and what was discussed.
Avoid altering or writing on original documents.
9. Be Careful About Giving the Insurance Company Additional Statements
An insurer may request additional information while investigating or reconsidering a claim.
Some requests are routine and legitimate. But if the insurer is investigating whether grounds exist to avoid coverage, the information provided can become part of the claim record.
Before providing a lengthy written statement, signing a broad authorization, or responding to disputed factual allegations, it may be appropriate to understand why the insurer wants the information and how it relates to the denial. It is essential that you do not guess when responding to the questions. If you are not 100% certain of the answer, you should not provide a definitive answer. The life insurance company will gladly hold you to your response, even if you were mistaken.
10. A Delayed Claim Is Different From a Denied Claim
Sometimes an insurer has not formally denied the claim but continues investigating it. Often this process takes far longer than it should.
Minnesota law contains specific provisions concerning interest on unpaid life insurance benefits.
Generally, when the statute applies, interest is calculated from the insured's death until payment. The statute also provides for an increased interest rate when an admitted insurer does not pay qualifying life insurance proceeds within 60 days after receiving due proof of death, subject to statutory requirements and exceptions. Given this statute, it is important that you provide proof of death to the insurance company (and keep proof of doing so) as soon as possible.
That does not mean every life insurance claim must automatically be paid within 60 days. A legitimate coverage or beneficiary dispute may require investigation or litigation.
But beneficiaries dealing with a prolonged delay should understand the difference between an insurer investigating a claim and an insurer formally denying it.
11. Determine Whether There Is Actually a Beneficiary Dispute
Sometimes there is nothing wrong with the insurance coverage at all.
The problem is that the insurer does not know who should receive the money.
For example:
a former spouse and current spouse may both claim the proceeds;
two different beneficiary forms may exist;
the beneficiary designation may have been changed shortly before death;
someone may contend that the insured lacked capacity when changing beneficiaries;
a beneficiary change may be challenged as the product of undue influence;
the authenticity of a signature may be disputed; or
the insurer may receive competing claims from different people.
In these situations, the insurance company may ultimately file an interpleader action and ask a court to determine who is legally entitled to the proceeds.
That is different from a conventional claim denial.
12. Determine Whether the Policy Came Through an Employer
This is an important question because employer-provided life insurance may be governed by the federal Employee Retirement Income Security Act, commonly known as ERISA.
An ERISA claim can be substantially different from a dispute involving an individual life insurance policy.
Among other things, the administrative claim and appeal process can be important. The denial letter and applicable plan documents should be reviewed carefully for information about appeal rights and deadlines. The deadlines to appeal an ERISA claim denial can be very short and your appeal may be considered to contain the entirety of your arguments (even if you later filed litigation). As such, it is strongly advisable for an attorney to assist with an appeal.
If the policy came through the insured's employment, do not assume that the same procedures and legal rules applicable to an individually purchased policy necessarily apply.
Can You Challenge a Denied Life Insurance Claim?
Absolutely, Mark Santi has recovered millions of dollars for beneficiaries who had their claim denied.
Whether a denial can successfully be challenged depends on why the insurer denied the claim, the policy language, the underlying evidence, and the law that governs the policy.
Potential disputes can involve:
whether an alleged misrepresentation was sufficient to justify the denial;
whether the insurer properly relied on the insurance application;
whether the policy actually lapsed;
whether required notices were provided;
whether an exclusion applies;
whether the contestability period affects the insurer's position;
whether the insurer has correctly interpreted the policy;
whether federal ERISA law governs the claim; or
who is legally entitled to the policy proceeds.
The important point is that the insurer's denial letter is its position on the claim. Whether that position is supported by the policy, facts, and applicable law is a separate question.
Can You File a Complaint With the Minnesota Department of Commerce?
Minnesota consumers can contact the Minnesota Department of Commerce with questions or complaints involving life insurance.
The Department's Consumer Services Center accepts insurance complaints and may investigate disputes involving regulated insurance companies.
A regulatory complaint and a legal claim against an insurer, however, are not necessarily the same thing. Depending on the circumstances, filing a complaint may not resolve questions involving policy interpretation, disputed evidence, competing beneficiaries, ERISA, or litigation.
We have seen the Department of Commerce fail to discipline a life insurance company, and then we have achieved a full recovery on the policy. It is not advisable to rely solely on the Department of Commerce.
What Should You Bring to a Lawyer After a Life Insurance Claim Is Denied?
If you speak with an attorney about a denied life insurance claim, it can be helpful to have:
the denial letter;
the life insurance policy or certificate;
the original application, if available;
the claim forms;
the death certificate;
correspondence from the insurance company;
premium-payment records;
beneficiary designations;
medical-record requests or authorizations;
documents from the insured's employer if the insurance was employment-related; and
any other documents the insurer identified in explaining the denial.
Do not delay contacting an attorney simply because you do not have every document. An attorney can help determine what additional information may be needed.
Frequently Asked Questions About Denied Life Insurance Claims in Minnesota
Does a life insurance company have to tell me why it denied the claim?
You should obtain the insurer's reason for denying the claim in writing and identify the policy provisions upon which it relies.
Can a life insurance company deny a claim because of something in the insured's medical records?
An insurer may rely on medical information when it contends that answers on the insurance application were inaccurate or incomplete. Whether the information legally justifies denying the death benefit depends on the circumstances, including the application, policy, timing, evidence, and applicable law.
Can a life insurance company deny a claim after the policy has been in force for two years?
Minnesota life insurance policies generally contain an incontestability provision associated with the policy being in force during the insured's lifetime for two years, subject to exceptions. Whether a particular claim can still be disputed after that period depends on the basis for the insurer's position and the applicable policy and law.
What if the insurance company says the policy lapsed?
Obtain the insurer's payment history and relevant notices and compare them with the insured's financial records. Questions about premium payments, notices, grace periods, automatic withdrawals, and reinstatement can become important in a lapse dispute. An incorrect determination of lapse is the most common reason why we are untimely able to secure recovery on a previously denied life insurance claim.
What if two people claim to be the beneficiary?
The insurer may delay distributing the proceeds while the competing claims are investigated. In some cases, the insurer may file an interpleader lawsuit, deposit the proceeds with the court, and ask the court to determine the proper beneficiary.
How long should I wait after a life insurance claim is denied before talking to a lawyer?
There is usually little advantage in allowing a denial letter to sit unanswered simply because you are unsure what to do next. Different policies and claims can involve different procedures and deadlines, particularly when employer-sponsored coverage and ERISA are involved.
Having the denial and relevant documents reviewed can help identify the applicable issues and available options.
Talk to Mark Santi About a Denied Claim
If a life insurance company has denied a death-benefit claim, the reason given in the denial letter is the starting point—not necessarily the final answer.
Mark Santi represents clients in Minnesota life insurance disputes, including denied claims, beneficiary disputes, contestability and misrepresentation issues, policy lapse disputes, and other disagreements concerning life insurance proceeds. Mark is extremely passionate about life insurance law and has recovered millions of dollars for beneficiaries.
If you have received a life insurance claim denial, contact Mark Santi (at 612-808-9082 or mark@thesantifirm.com) to discuss the policy, the insurer's stated reason for denial, and the circumstances of the claim. Please note that Mark requires a minimum 10 hour retainer for hourly work but may accept a contingency arrangement (no fee unless you win) for claims of $100,000 or more.
