Common Reasons for Claim Denials in Wisconsin and How to Fight Them

 Common Reasons for Life Insurance Claim Denials in Wisconsin—and How to Challenge Them

By: Mark C. Santi, Esq. (Mark@TheSantiFirm.com | 612-808-9082)

1. The insurer says the policy lapsed for nonpayment

This is the most common type of denial I see and, often, it is one of the most unjust.  An insurer may deny a claim by arguing that coverage ended because a premium was not paid.  Often, there was a missed premium shortly before the covered individual’s death because they were sick, hospitalized, or otherwise not a favorable position to pay their premium. But a missed payment does not always mean coverage had already ended when the insured died.  Life insurance companies often send an incorrect lapse notice or miscalculate the grace period.  Nevertheless, we typically must fight very hard for the life insurance company to overturn its original denial.

Wisconsin law requires an individual life insurance policy to provide at least a 31-day grace period after a premium due date, during which the death benefit remains in force. Group life policies also have a required grace period.  See Wis. Stat. § 632.44(2) for individual policies and Wis. Stat. § 632.56(5) for group policies.

How the denial may be challenged: Check the premium history, the date of death, and any lapse or cancellation notices. Determine whether the insured died during the grace period, whether a payment was made, or whether the policy had an automatic premium loan or other feature that kept coverage in force. If the insurer sent notices to the wrong address or did not follow the policy’s notice requirements, that may also matter.  I have discovered many ways in which the life insurance company failed to properly terminate the policy.  Often the analysis is complex.  It is highly recommended that you do not simply take the life insurance company ‘at their word’ if they claim to have properly cancelled a life insurance policy shortly before your loved one’s death.

2. The insurer alleges a misrepresentation on the application

An insurer may claim that the insured gave an inaccurate answer about medical history, tobacco use, medication, or another underwriting question. This issue often arises when the insured dies within the policy’s contestability period.  Often life insurance companies based their allegation of a misrepresentation off answers to a questionnaire they send to the deceased’s family members.  Be very careful in completing the questionnaire because you may likely prejudice your rights.  Speak with an experienced life insurance attorney.

Wisconsin law generally bars an insurer from contesting an individual life policy after it has been in force for two years during the insured person’s lifetime, subject to statutory exceptions. Wis. Stat. § 632.46. Group life coverage has separate rules. 

For policies that remain contestable, Wisconsin law limits when a misrepresentation can affect coverage. Among other requirements, the insurer generally must show that the applicant knew or should have known the statement was false, and that the insurer relied on it and it was material or made with intent to deceive—or that the misrepresented fact contributed to the loss.  Wis. Stat. § 631.11(1)(b) The statute also addresses the insurer’s knowledge and the documents that must support a challenge.

How the denial may be challenged: Request the complete application, the policy and endorsements, and the records the insurer relied on. Compare the question as it was asked with the answer recorded. Check whether the applicant signed the relevant document and whether the application was provided as required. Medical records, agent notes, and evidence about what the insured disclosed can help test the insurer’s claim.

3. The insurer says an exclusion applies

A policy may exclude or limit coverage in specified circumstances. An insurer might rely on a suicide clause, an aviation or other hazardous-activity exclusion, or a provision tied to the cause or circumstances of death. The wording and time period in the actual policy matter; exclusions are not all the same.

How the denial may be challenged: Ask the insurer to identify the precise policy language and explain how the facts fit it. Review the full policy, including riders and amendments, and compare the exclusion with the available evidence about the death. A death certificate, autopsy, police report, or other records may clarify facts the insurer has misunderstood or relied on incompletely.

4. The insurer disputes whether group coverage was still in force

Employer-sponsored life insurance can end or change when employment ends, the employee becomes ineligible, or the employer changes its plan. Wisconsin law provides a conversion option for certain group life coverage that ends because of termination of employment or loss of eligibility. The statute generally requires a written application and first premium within 31 days. It also addresses deaths during the conversion period.

How the denial may be challenged: Obtain the group policy, certificate, summary plan description, employment records, and all notices about coverage ending or conversion rights. Check the date coverage ended, whether the employee received required information, and whether the insured died during a conversion period. If the claim involves an employer-sponsored plan, federal ERISA rules may govern the appeal process.

5. The insurer says the claimant is not the named beneficiary

A claim may be disputed because the insurer’s records name someone else, a beneficiary form is missing, or multiple people claim the proceeds. Wisconsin law allows policyholders to change a beneficiary, subject to policy formalities. It also addresses when a change request delivered to an intermediary representing the insurer can give the insurer actual notice.

How the denial may be challenged: Request copies of every beneficiary designation and change form, along with the insurer’s records showing when it received them. Look for evidence that the insured submitted a change request or that an agent or other insurer representative received it. If the insurer’s records are incomplete or a form was processed incorrectly, supporting documents and communications may help resolve the dispute.

What to do after a life insurance claim denial in Wisconsin

Start by reading the denial letter and collecting the policy, certificate, application, beneficiary forms, premium records, claim forms, and insurer correspondence. Ask the insurer for the complete claim file and the specific policy terms supporting its decision.

If the policy came through an employer, check the appeal deadline in the plan documents and denial notice. ERISA-covered plans must provide a claims review process; the applicable deadlines and procedures depend on the type of benefit and plan.

You may also file a complaint with the Wisconsin Office of the Commissioner of Insurance (OCI) if you cannot resolve a life insurance claim dispute with the insurer. OCI reviews complaints for compliance with Wisconsin law and policy terms, but it does not act as your lawyer or determine the value of a claim.

Deadlines can affect a beneficiary’s rights, so consider speaking with a Wisconsin life insurance attorney promptly—especially if the insurer alleges fraud, contests a beneficiary change, or has issued a final denial.

Mark offers free consultations for matters with damages of $100,000 or more and often represents clients on a contingency basis (no fee unless you recover) for matters with damages of $100,000 or more.  Mark co-counsel’s with local counsel where required by ethical rules.

Call: 612-808-9082
Email: mark@thesantifirm.com

This article provides general information, not legal advice. The result in any claim depends on the policy, the facts, and any applicable state or federal law.