How to Challenge a Life Insurance Claim Denial in New York: A Step-by-Step Guide for Beneficiaries

Life insurance provides financial security for loved ones when they face the loss of someone who supported them. In New York, life insurance policies often bring peace of mind, offering a layer of stability during difficult times. However, when an insurance company denies a life insurance claim, it can be devastating. Families who expected the policy to help cover expenses and ease financial burdens are suddenly left with unanswered questions and financial stress. Understanding why a life insurance claim might be denied, and knowing how to challenge this denial, is essential for those seeking justice and fairness. At, Trief & Olk, we are here to guide you through the legal process and help you navigate the complexities of your case.

Common Reasons for Life Insurance Claim Denials

There are several reasons why a life insurance claim might be denied. One common reason is the insurance company’s belief that the policyholder misrepresented information when applying for the policy. Insurance companies may claim that the policyholder provided inaccurate details about their health, lifestyle, or habits. If an individual leaves out or misstates details, whether intentionally or by accident, the insurance company could use this as a reason to deny the claim.

Another reason might be that the policyholder died during the “contestability period.” In New York, the contestability period typically lasts two years from the time a life insurance policy is issued. During this time, the insurance company has the right to review the policyholder’s information more carefully. If the policyholder passes away within these two years, the insurance company may examine their application and look for reasons to deny the claim.

Sometimes, insurance companies deny claims because they believe the cause of death is not covered by the policy. Life insurance policies often list specific exclusions, such as suicide within a certain period or death from risky activities. If the insurance company determines that the cause of death falls within an exclusion, it may deny the claim, leaving the family without benefits.

Ted Treif (Partner)

Life insurance attorney since 1976

Barbara Olk (Retired)

Life insurance attorney since 1976

Eyal Dror (Associate)

Life Insurance Attorney since 2007

Missed premium payments can also result in a claim denial. If the policyholder did not pay premiums on time, the policy may have lapsed, which means it is no longer active. Insurance companies may deny claims if they find that the policy lapsed before the policyholder’s death. Although there are often grace periods for missed payments, families may still face denials if they cannot prove that payments were made or if they missed payments outside of these grace periods.

Steps to Challenge a Life Insurance Claim Denial in New York

If you find yourself dealing with a denied life insurance claim, there are steps you can take to challenge the decision. First, it is important to understand the reason for the denial. Carefully review the letter or explanation provided by the insurance company to determine why the claim was denied. Look for any specific terms, exclusions, or reasons that the insurance company provided. Once you have this information, you can begin to prepare for the challenge.

Gathering documents is a crucial step. Find any paperwork related to the life insurance policy, including the original policy agreement, payment records, and communication with the insurance company. You may need medical records, statements, or documents that demonstrate that the policyholder provided accurate information on their application. These records can help counter any claims of misrepresentation or false information.

Life Insurance Denial Statistics

20%

The annual average number of life insurance claims denied.

$50 Million

The yearly average dollar amount of claims denied by life insurance companies.

.2%

The number of claims appealed annually by consumers.

Another important step is to reach out to the insurance company to request an internal review. Many insurance companies have an appeals process where you can ask them to take a second look at the claim. Submit all necessary documents and present a clear argument for why the denial should be reconsidered. While this process can be time-consuming, it may resolve the issue without further action.

If an internal review does not result in a reversal of the denial, you might consider filing a complaint with the New York State Department of Financial Services (DFS). The DFS regulates insurance companies in New York and may investigate cases of denied claims. Filing a complaint with the DFS can add pressure on the insurance company to ensure they are handling the claim fairly.

Legal Grounds for Challenging Life Insurance Claim Denials

Several legal grounds may support your challenge to a life insurance claim denial. One legal argument is that the insurance company acted in bad faith. Bad faith means that the insurance company did not handle the claim fairly or reasonably. Insurance companies are required by law to act in good faith and deal honestly with policyholders and beneficiaries. If there is evidence that the insurance company delayed, denied, or misrepresented information to avoid paying the claim, you may have a strong case for bad faith.

Misinterpretation of policy terms is another potential legal argument. Sometimes insurance companies deny claims based on how they interpret the terms of the policy. However, New York courts have ruled that ambiguous terms in insurance policies should be interpreted in favor of the policyholder. If the insurance company’s interpretation of the policy terms seems unreasonable, challenging this interpretation in court could help you win the case.

Settlements & Verdicts

$3 Million Policy

William Penn Life Insurance

$1.2 Million Policy

Primerica

$1.5 Million Policy

Metropolitan Life Insurance Company

$1 Million Policy

Protective Life Insurance

$675,000 Settlement

Confidential Settlement

$4.3 Million Policy

State Farm, Primerica, Farmers, BrightHouse

In cases where the insurance company claims misrepresentation, the burden of proof is often on the insurance company to show that the misrepresentation was significant and would have impacted their decision to issue the policy. In New York, not every misstatement on an application is grounds for denial. The insurance company must show that the information was material to their decision. If the misrepresentation was minor or did not affect their decision, the denial may be overturned.

Hiring a Lawyer to Challenge the Denial

Hiring a lawyer can make a significant difference when challenging a life insurance claim denial. Life insurance policies are complex legal contracts, and understanding the fine print can be challenging for anyone unfamiliar with insurance law. An attorney with experience in life insurance claims can review your case, analyze the policy language, and determine the best approach to challenge the denial.

An attorney can also help gather evidence to support your case. This might include obtaining medical records, financial documents, or opinions to show that the insurance company’s denial was unfounded. An attorney can also negotiate with the insurance company on your behalf, which may increase the chances of a successful appeal.

If negotiation and internal reviews do not resolve the issue, an attorney can represent you in court. Lawsuits against insurance companies can be complex and require detailed knowledge of New York insurance laws. An attorney can build a strong case, present evidence, and argue on your behalf to help you secure the life insurance benefits you deserve.

How New York Law Protects Life Insurance Beneficiaries

New York law provides certain protections for life insurance beneficiaries. For example, New York requires that life insurance companies act in good faith when handling claims. This means they must promptly investigate and make decisions on claims and cannot unreasonably delay payments. If an insurance company is found to be acting in bad faith, they may face legal consequences.

Additionally, New York law requires insurance companies to give policyholders and beneficiaries clear information about their rights and obligations. If an insurance company failed to disclose important information about the policy, beneficiaries might have grounds to challenge the denial. New York law also mandates grace periods for missed premium payments, giving policyholders time to catch up on payments and avoid policy lapses.

What to Expect During the Appeals Process

The appeals process can take time and may require patience. After you submit your appeal, the insurance company may request additional documents or information. They may also investigate the claim further, especially if they believe the policyholder misrepresented information. While waiting for a decision, it’s important to stay organized and keep track of all communication with the insurance company.

If your initial appeal is denied, you may have other options, such as filing a complaint with the DFS or pursuing legal action. The DFS may investigate and can sometimes mediate between you and the insurance company. However, if these steps do not resolve the issue, a lawsuit may be necessary to obtain the benefits you are entitled to.

When Legal Action Becomes Necessary

If all other options have been exhausted, legal action may be the best way to challenge a life insurance claim denial. A lawsuit allows you to present your case in front of a judge, who can review the evidence and determine whether the insurance company’s denial was justified. Taking legal action can be intimidating, but in some cases, it is the only way to secure the benefits owed under the policy.

Legal action can also lead to a settlement with the insurance company. Many insurance companies prefer to settle claims out of court to avoid the costs of litigation. With a strong case and experienced legal representation, you may be able to negotiate a favorable settlement and receive the compensation you deserve.

If you are facing a life insurance claim denial in New York, it is crucial to know that you do not have to handle this challenging situation alone. The team at Trief & Olk understands the complexities of life insurance law and is committed to helping clients fight for their rights. With experience in handling life insurance disputes, Trief & Olk will review your case, guide you through the appeals process, and advocate for you every step of the way. Contact Trief & Olk today to get the support you need in challenging a life insurance claim denial and securing the financial protection your family deserves.