Contestability Period Disputes: Why Insurance Companies Closely Examine Early Claims

An Early Life Insurance Claim May Receive Extra Scrutiny

When a life insurance claim is filed shortly after a policy takes effect, the insurance company may take a closer look at how the policy was obtained.

This is because most life insurance policies contain a contestability period, typically lasting about two years. During that period, an insurer may investigate whether information provided on the application was inaccurate or incomplete.

That investigation can be unsettling for a beneficiary who expected the claim to be straightforward. But an investigation and a denial are not the same thing.

The insurer still needs a valid reason under the policy and applicable law to refuse payment.

The First Two Years Can Trigger a Closer Review

The contestability period generally gives an insurance company an opportunity to review statements made when the insured applied for coverage.

For example, the application may have asked about:

• Medical conditions
• Previous diagnoses
• Medications
• Hospitalizations or medical treatment
• Tobacco use
• Occupation
• Other information used during underwriting

If the insured dies during the contestability period, the insurer may compare those answers with records obtained during the claim investigation.

What happens next depends on what the investigation reveals.

A difference between an application and later records does not necessarily mean the insurer can automatically cancel the policy. In many states, the disputed information must be material, meaning it was significant to the insurer's decision to issue the policy or provide coverage on particular terms. The exact legal standard varies by state.

Medical Records May Become Part of the Investigation

Medical records often play an important role in contestability disputes.

An insurer may review records from doctors, hospitals, pharmacies, or other healthcare providers and compare them with the health information included in the original application.

Suppose an application stated that the insured had never been treated for a particular medical condition, but later records appear to show treatment before the policy was issued. The insurer may investigate whether the answer was inaccurate and whether the information would have affected underwriting.

But beneficiaries should not assume that every discrepancy proves the insured intentionally gave false information.

Records can be complicated. Questions on applications can be misunderstood. Medical histories may contain errors. And not every omitted detail is necessarily significant enough to justify denying benefits. That is why the specific application questions, answers, records, and state law all matter.

Obtaining those records can also create practical problems for beneficiaries. Once the insured has died, privacy rules, provider procedures, authorization requirements, and other obstacles may make it difficult for a beneficiary to obtain complete medical records directly.

An insurer may nevertheless ask the beneficiary to collect records as part of its investigation. Whether that request is reasonable, and who is responsible for obtaining the information necessary to evaluate the claim, can depend on the policy, applicable law, and circumstances of the investigation.

Beneficiaries May Have Difficulty Obtaining a Deceased Insured’s Medical Records

A contestability investigation can become more difficult when an insurer asks a beneficiary to obtain medical records that are hard or impossible to access. Providers may require specific documentation, and beneficiaries may not have the same authority to request records as the insured.

If an insurer delays or denies a claim because the records were not provided, an attorney can review whether the company conducted a reasonable investigation or improperly shifted responsibility to the beneficiary. 

Insurers May Review the Entire Application

A contestability investigation is not necessarily limited to the cause of death.

The insurer may examine the original application and underwriting materials to determine whether information relevant to the insurer's decision was misstated or omitted. That can create disputes when the insurer claims it would have:

• Refused to issue the policy
• Charged a different premium
• Offered different coverage
• Required additional underwriting

The beneficiary may disagree with those conclusions.

In some cases, the disagreement becomes less about what the application says and more about whether the alleged mistake was serious enough to legally justify denying the claim.

The Insurer Still Has to Support Its Decision

The fact that a death occurred within the contestability period does not by itself establish that anything was wrong with the application. The precise burden and legal requirements vary by state, but the broader point is important: an insurer should not be able to deny benefits merely because the policy was relatively new.

If the company claims there was a material misrepresentation, the evidence supporting that conclusion can become a central part of the dispute.

Contestability Denials Can Be Challenged

A denial following a contestability investigation does not necessarily end the claim. A beneficiary may be able to challenge whether:

• The application answer was actually incorrect
• The insured understood the question
• The insurer accurately interpreted the medical records
• The alleged misrepresentation was material
• The insurer would truly have made a different underwriting decision
• The insurer reasonably investigated the claim and made appropriate efforts to obtain the records it relied on
• The insurer improperly placed responsibility for obtaining difficult-to-access records on the beneficiary
• The insurer followed applicable law when investigating and denying the claim

It can also be important to obtain the insurer's written explanation for the denial and identify the exact application answer or policy provision it relied on.

An attorney can then compare the insurer's reasoning with the application, medical evidence, underwriting materials, policy language, and applicable law.

Morgan & Morgan Can Review a Contestability Period Denial

A beneficiary may feel at a disadvantage when an insurance company has already investigated a claim and concluded that benefits should not be paid. That conclusion does not necessarily have to be the final word.

Morgan & Morgan can review the original application, policy, medical records, insurer correspondence, and reasons given for the denial. If the insurer improperly rescinded the policy or denied benefits based on a questionable contestability investigation, our attorneys may be able to challenge its findings and pursue the benefits you are owed.

Contact Morgan & Morgan today for a free case evaluation. The Fee Is Free™ promise means you don't pay unless we win.

Frequently Asked Questions

What is the contestability period?

The contestability period is the period shortly after a life insurance policy takes effect during which the insurer may challenge coverage based on certain issues involving the application.

It is usually about two years, although the policy and applicable state law should always be reviewed.

Can every early claim be investigated?

A claim made during the contestability period may receive additional review, but the insurer's ability to investigate and challenge coverage is still governed by the policy and applicable law.

The fact that someone died within the first two years does not, by itself, prove that there was a problem with the application or justify denying benefits.

Does an investigation automatically mean denial?

No. An investigation simply means the insurer is reviewing the claim and information connected with the policy.

If the records are consistent with the application, or if the insurer does not have a valid legal basis to challenge coverage, the benefits may still be payable.

What evidence helps prove my claim?

Helpful evidence can depend on the reason the insurer is questioning the policy, but it may include:

• The original life insurance application
• The complete policy
• Medical records
• Prescription records
• Communications with the insurance agent or insurer
• Underwriting records
• The insurer's denial letter
• Documents showing what information was available when the policy was issued

An attorney can help identify which evidence may be most important to the particular dispute.

What if I cannot obtain the insured’s medical records?

Beneficiaries may have difficulty obtaining medical records after the insured has died. Healthcare providers may require proof of legal authority or other documentation before releasing records, and a beneficiary may not automatically have access to the insured’s complete medical history.

If an insurance company is demanding records before it will complete a contestability investigation, that does not necessarily mean the beneficiary must obtain every record personally.

The policy, available authorizations, applicable law, and insurer’s own investigative responsibilities may affect who should obtain the records. If the insurer delays or denies the claim because records were not provided, an attorney can review whether the company handled the investigation appropriately.

Can an attorney challenge the insurer's findings?

Yes. An attorney can review whether the insurer accurately interpreted the application and medical evidence, whether the alleged misrepresentation was material, and whether the company followed the policy and applicable law.

Depending on the circumstances, an attorney may challenge the denial directly with the insurer or pursue legal action when appropriate.

Why should I choose Morgan & Morgan?

Contestability disputes can involve years of medical records, detailed insurance applications, underwriting decisions, and complicated policy language.

Morgan & Morgan has the resources to investigate the insurer's reasoning, review the evidence behind its decision, and challenge an improper denial when appropriate.

Our attorneys fight For The People™, not the insurance companies. If a life insurance company is refusing to pay because of something it claims was wrong with the original application, we can review the claim and explain your legal options.

Contact Morgan & Morgan today for a free case evaluation. The Fee Is Free™: you don't pay unless we win.