Misrepresentation accusations often lead to life insurance denials when insurers find false or omitted information in an application that they believe would have changed their decision to issue a policy. These life insurance denials usually occur after the insured passes away and the insurer conducts a deeper investigation, commonly referred to as “post-claim underwriting,” into the insured’s medical, personal, or financial history. Once misrepresentation accusations arise in the process, consulting a life insurance lawyer in California can be significant to assist beneficiaries with insurance claims that may result in denials.
What Is Misrepresentation in Life Insurance?
In life insurance, misrepresentation generally refers to false, incomplete, or misleading information provided by the insured during the application process. Even unintentional misstatements may be grounds for an insurer to rescind a policy if the misstatement is material, meaning it would have influenced the insurer’s decision to issue or underwrite the policy.
Some of the most common types of misrepresentation that can trigger a life insurance denial include:
- Failing to mention a diagnosis, prior treatment, or ongoing health issue like diabetes, heart disease, or cancer.
- Omitting information about tobacco or drug use, alcohol abuse, or participation in high-risk activities such as skydiving or scuba diving.
- Reporting incorrect income or job title, especially in policies that require financial justification for higher coverage amounts.
- Not disclosing medications that could reveal an underlying condition that wasn’t mentioned.
In many cases, applicants may not knowingly provide incorrect information. They might misunderstand a question, forget a past diagnosis, or fail to mention occasional recreational habits. Nonetheless, under California law, even these innocent mistakes can be used by an insurer to void the contract and deny a claim if the information is considered material.
How Misrepresentation Accusations Lead to a Life Insurance Denial
Misrepresentation accusations typically surface after a policyholder’s death, when the insurance company is reviewing the claim. If the insured passed away within the policy’s contestability period (usually the first two years), the insurer may conduct a more detailed investigation into the insured’s history. This process is what industry professionals call post-claim underwriting.
During post-claim underwriting, insurers will:
- Obtain full medical records from healthcare providers
- Review pharmacy and prescription history
- Examine public databases such as the Medical Information Bureau (MIB)
- Assess financial records, employment documentation, or tax filings
If any of these sources reveal information that was not disclosed or was misrepresented on the application, the insurer may issue a denial letter. Under California law, the insurer may then seek to rescind the policy, essentially treating it as if it never existed, and refund the premiums rather than pay the death benefit.
What Beneficiaries Should Do After a Life Insurance Denial
When you receive a denial based on alleged misrepresentation, take immediate steps to protect your claim:
- Do not accept a refund of premiums. Accepting a refund may weaken your ability to challenge the rescission of the policy.
- Request a copy of the denial letter and policy. These documents outline the basis for the denial and are essential for legal review.
- Gather supporting records. Medical documents, application drafts, email correspondence, and statements from the agent may help refute the insurer’s claim.
A legal review by a life insurance attorney can determine the best course of action based on the policy type, governing law, and available evidence.
Request and review the insurer’s file. An attorney can demand the full claim file, including the application, underwriting guidelines, internal communications, and any medical records the insurer used to support the denial. This allows your legal team to assess whether the alleged misrepresentation was actually material.
Compare the application with external records. A careful review may reveal that the so-called misrepresentation is based on outdated or incorrect medical records, vague application wording, or innocent inconsistencies. For example, a person may have reported “no” to a question about treatment for depression because they did not consider short-term grief counseling to qualify.
Build a factual timeline. Establishing a clear timeline helps challenge insurer assumptions. If the insured applied for coverage years before a diagnosis was made or before symptoms even appeared, the insurer’s denial may lack legal merit.
Identify governing laws. A life insurance attorney can determine whether your claim is governed by California law or ERISA, and ensure that all procedural requirements are met.
Individual life insurance policies are governed by California state law, including the Insurance Code provisions that define misrepresentation and concealment. In these cases, a beneficiary can file a case in state court to challenge the denial.
Group life insurance policies, on the other hand, offered through an employer are typically governed by federal law, specifically the Employee Retirement Income Security Act of 1974 (ERISA). Under ERISA, beneficiaries must usually exhaust administrative remedies, such as a written appeal, before filing a lawsuit in federal court. The rules for what evidence can be considered are more restrictive, and deadlines are critical.
Whether your claim is governed by state or federal law, insurers must demonstrate that the misrepresentation was material to their underwriting decision. But in practice, insurance companies often take a broad view of materiality, arguing that any inconsistency could have affected their risk assessment.
Need Legal Help for After Misrepresentation Accusations in Life Insurance?
Misrepresentation accusations are one of the most common and most aggressive tactics insurers use to deny life insurance claims. Whether the information was wrong, incomplete, or simply misunderstood, these denials should not go unchallenged. California law places the burden on insurers to prove that any misstatement was material, while federal law under ERISA sets strict procedures for group life claim appeals.
At the Law Offices of Kevin M. Zietz, PC, we have over 25 years of experience handling misrepresentation-based life insurance denials. We know how to compel insurers to prove that the misrepresentation was material and that they would have taken a different underwriting action had the information been disclosed.
If you’ve received a misrepresentation accusation and need guidance on how to deal with it, our life insurance lawyer can evaluate your case and help you fight back. To get started, call 818-981-9200 or contact us online to schedule your free consultation.
