common reasons an insurer can deny a life insurance claim

according to the canadian life & health insurance association – 22 million canadians have life insurance coverage, totalling $5.3 trillion.

by nainesh kotak

published nov 20, 2023

last updated jun 05, 2024

2 minute read

join the conversation

2 minute read

join the conversation

common reasons an insurer can deny a life insurance claim

life insurance denials can have big impacts on the policy holder as well as their family — causing financial hardships and lack of intended supports. getty images

purchasing life insurance — privately or through your workplace disability plan — is a pretty common health and financial decision for many adults. but what happens if your life insurance claim is denied? we need some aspects of life insurance law to become general knowledge. having disability and life insurance is how most of us prepare to protect ourselves, and our families, should we be injured or become disabled.

when insurance contracts are negotiated and signed, many consumers believe they are buying a service to protect their income and lifestyle in the event of a catastrophic event. as long as premiums are paid and no claims are made, that perception holds true for the purchaser.

it is only when something happens and people get hurt or pass away that problems arise — when insurance companies don’t hold up their end of the bargain.

life insurance denials can have big impacts on the policy holder as well as their family — causing financial hardships and lack of intended supports, such as coverage for funeral expenses or paying off outstanding debts.

according to the canadian life & health insurance association – 22 million canadians have life insurance coverage, totalling $5.3 trillion. the average life insurance protection per household in canada is $458,000. in ontario, the average life insurance protection per insured household is even higher, at $485,000.

so what are the most common reasons an insurer denies a life insurance claim?

misrepresentation of your medical history or failure to disclose pre-conditions;
mistakes made when filling out a medical questionnaire such as failure to outline a history of cancer;
death involves hazardous activities, homicide, natural calamities, terrorist attack, suicide, or death due to a criminal act — check any policy carefully for exclusions.

what steps can you take when purchasing life insurance to avoid potential claim denial?

use a licensed insurance broker; he or she can help you make decisions about options and determine the right coverage that fits your needs.
know what your policy covers and what it doesn’t cover. read the fine print and ask the person who is selling it about any questions you have regarding coverage and if there is enough coverage to maintain your lifestyle.
organize your documents for emergency access, as notification timing is often critical. have all records for life insurance, critical illness insurance, as well as auto insurance policies organized in one place with the contact numbers for brokers and agents. make sure a family member knows where to find them, so they can act on your behalf should you become incapacitated.
if possible, before completing a health questionnaire for life insurance, consult your doctor, who may be able to help you accurately fill out the form.

finally, if you or your family member learns your life insurance claim has been denied, speak with a lawyer to find out your legal options. don’t waste time trying to fight the denial yourself. your policy comes with deadlines to respond, and there are limitations to sue — in ontario, it is generally two years.

nainesh kotak, is the founder of kotak personal injury law, a firm focusing on protecting their client’s rights to justice and obtaining the compensation their clients deserve. he also serves as the chair of the long-term disability section of the ontario trial lawyers’ association.