As the year draws to a close, many individuals may face time-sensitive challenges with life insurance claims. The upcoming deadlines, especially those tied to contestability clauses, make October an important month to be aware of in the life insurance process.
Life Insurance Denials often arise during this period, particularly when contestability clauses come into play. These clauses, commonly found in life insurance policies, can significantly impact the outcome of a claim if the insured person dies within the first two years of the policy.
What Are Contestability Clauses in Life Insurance? 
A contestability clause is a provision in most life insurance policies that allows the insurance company to challenge a claim if the insured dies within a specified period, typically two years, from the policy’s issue date. This clause exists to protect insurance companies from fraud by giving them the opportunity to verify the information on the policy application. If the insured person dies within the contestability period, the insurer has the right to investigate the circumstances surrounding the application and the death, which may include reviewing medical records, lifestyle information, and financial history. While this clause is a safeguard for the insurer, it can create problems for beneficiaries. In the unfortunate event of a death during the contestability period, the insurance company may deny the claim or delay payments while they investigate. The good news is that once this contestability period ends, the insurer generally cannot contest the claim based on any misrepresentation or omissions in the application, unless they can prove fraud or criminal activity. Why Deadlines Matter in Contestability Clauses
Deadlines related to contestability clauses are extremely important, especially for those whose loved ones are nearing the two-year mark. Many people may not realize that if the insured person dies near the contestability period deadline, it can trigger a claim denial. Insurance companies are strict about these deadlines and may contest claims even if the death occurs only a few days before the two-year limit expires.
Life insurance attorney since 1976
Life insurance attorney since 1976
Life Insurance Attorney since 2007
For example, if a policyholder has had their life insurance policy for almost two years and passes away in late October, the insurance company may investigate whether the insured accurately disclosed their medical history or lifestyle information. This investigation can take several weeks or even months, leaving beneficiaries in limbo. As October approaches, it’s important to remember that while the insurance company can contest claims within this period, once it expires, contestability no longer applies. This means that if a policyholder passes away after the two-year contestability period ends, the claim is typically paid out without delay, assuming there are no other complications. How Contestability Clauses Can Lead to Life Insurance Claim Denials
Several factors can contribute to a claim being denied under a contestability clause. The most common reason for contesting a life insurance claim is that the insurer believes the policyholder misrepresented key details when applying for the policy. Here are some reasons a claim may be denied during the contestability period: Material Misrepresentation
If the policyholder failed to disclose critical information or provided false information about their health, occupation, or lifestyle, the insurer may deny the claim. This is common in cases where a policyholder has a pre-existing health condition or engages in high-risk activities but does not report these facts on their application.
We contacted Trief & Olk to help us with a life insurance issue and Shelly Friedland was the attorney assigned to our case. Before Shelly took our case she explained to us that the likelihood of our success without going to court was possible but not likely. Unfortunately we did not get the outcome we had hoped for but it was our decision to not move forward and have our case litigated. Shelly is very knowledgeable and was very straight-forward in her assessment of our case as we moved forward. She was very patient and thorough in answering our questions. She always responded in a timely manner and listened to our concerns. We would certainly recommend Shelly and would use her firm again in the future.”
- John Ramig
If there is any possibility of winning your life insurance case – this is the place to do it for you. They are efficient, honest and will achieve the best possible outcome.
Shelly Friedland worked on my case where a life insurance policy had lapsed and was even a few days beyond the grace period. Farmers had rejected my claim twice and was unwilling to take a second look. Shelly was able to get them to pay the entire claim without going to court, and the full amount was deposited in my account within a couple months. Highest recommendation.”
- Kathleen Brown
Trief & Olk is a superior law firm. Their attorneys and other legal professionals have a brilliant understanding of the law and the litigation process. They diligently perform their work in an efficient, strategic and cost-effective manner to ensure the best possible outcomes for their clients.
- Christopher Hughes
Inaccurate Beneficiary Designations
Sometimes, beneficiaries listed on a policy may be incorrect, outdated, or improperly recorded. This can lead to complications during the claims process, especially if the insured’s death occurs shortly before the contestability period ends. Policy Lapse Due to Nonpayment
Another reason a claim could be contested is if the policy lapses due to nonpayment of premiums. If the insurer can demonstrate that premiums were not paid or were paid late, they may argue that the policy was invalid at the time of death, leading to a claim denial. Suicide
In some cases, life insurance policies contain clauses that exclude payment if the insured dies by suicide within the first two years of the policy. If suicide is suspected as the cause of death, the insurer may contest the claim based on this clause, even after the contestability period ends. What Can You Do If Your Life Insurance Claim Is Denied
If you find yourself in the unfortunate position of having your life insurance claim denied due to a contestability clause, there are steps you can take to fight back and protect your rights. First and foremost, it’s crucial to understand why the claim was denied. The denial letter should outline the specific reasons for the insurer’s decision, and you should review this carefully to determine if there is any basis for contesting the decision. If the denial is due to an error in the application or an omission of information, you may be able to provide additional documentation to clarify the situation. It’s important to gather all relevant medical records, personal history, and financial records to support your claim. Consulting an Experienced Life Insurance Attorney
Navigating life insurance claim denials can be complex and frustrating, especially when dealing with the legal intricacies of contestability clauses. This is where an experienced life insurance attorney can be invaluable. They can help you understand the terms of the policy, review the denial, and determine the best course of action to take. An attorney can assist you in filing an appeal with the insurance company, which involves presenting additional evidence or correcting any mistakes made by the insurer. In some cases, if the insurer does not reconsider their decision after the appeal, a lawsuit may be necessary. A skilled attorney will guide you through the process and represent your interests in court if needed. Taking Legal Action Against the Insurer
If all attempts to resolve the claim through an appeal fail, you may need to take legal action against the insurer. In cases of bad faith, where the insurer unjustly denies a valid claim or fails to act within the time frame specified in the policy, you may have grounds for a lawsuit. A life insurance attorney can help determine whether your case qualifies for legal action and will ensure that you meet all necessary deadlines and requirements. The Role of Legal Expertise in Contestability Claims
Given the complexities involved, particularly around contestability clauses and the tight deadlines that accompany them, having legal guidance is essential. At Trief & Olk, we have extensive experience in handling life insurance claim denials, including those related to contestability clauses. Our attorneys are committed to ensuring that you understand your rights and that your claim is given the proper attention. Understanding the implications of contestability clauses is critical for anyone who holds a life insurance policy, especially as important deadlines approach. If a claim is denied due to contestability issues, it can be disheartening and confusing for beneficiaries who are already grieving the loss of a loved one. It’s essential to be proactive and aware of the deadlines that apply to your policy. If you face a claim denial, seek the help of an experienced attorney who can advocate for your rights and help navigate the complex legal process. At Trief & Olk, we offer free consultations to discuss your life insurance claim and help you understand your legal options. Contact us today for expert guidance in contesting life insurance denials and securing the benefits you and your loved ones deserve. 
